Revised Freight Program Proposal - January 8, 2001

Overview of Project

The purpose of this project is to consolidate the freight purchase from the 5
companies throughout the ABC Enterprise Group, in order to improve service
levels, streamline administrative processes and reduce freight costs for each member
of the group.

Scope
This ABC Enterprise Group freight project will include the following companies.
1) A Ltd.
2) B Ltd.
3) C Ltd.
4) D Ltd.
5) E Ltd.

Objectives
The objectives of this project are to improve service levels, clarify administration
efficiencies, simplify freight processes and reduce freight costs overall for the
companies involved in the enterprise wide program.

Improve Service Levels: One main objective is to improve freight services to our
customers. Improved services will add value to all those who are directly and
indirectly involved in the process. By determining how the current shipping
processes support the member companies in their commitments to serving their
customers, we will be exploring alternatives that may achieve the goals more
effectively.
Improve Administration: Our main objective is to cut the cost of processing invoices
to our suppliers. This is reviewed from a mapping process and through technology
improvements.
Simplify Processes: Routing Guides will be provided to all locations. This will
reduce the amount of time internally when shipping product or ordering product and
ensure proper carrier utilization is achieved.

Reduce Costs: In order to achieve cost savings with our suppliers we will pool the
volumes of each company to increase our leverage in purchasing. This will involve
national and regional purchases. We expect a 10-15% cost saving.​
Values

Think locally act Nationally

Work closely as a team Win or Lose
 Use Agenda’s
Use follow up lists
Share the work load
Listen, Listen, Listen, Learn, Learn, Learn
Take decisions through consensus if possible.
If not then: Team Leader
Escalate when problems are encountered

Complete assignment on time in a professional manner.

Structures

Executive Sponsors
Person 1
Person 2

Advisory Committee

Person 3 - A Ltd.
Person 4 - B Ltd. Project Manager
Person 5 - C Ltd. Person 9
Person 6 - A Ltd.
Person 7 - D Ltd.
Person 8 - A Ltd.
Project Team Leader
Michelle Ward: Allfreight
Transportation Services Inc.

A Ltd. B Ltd. C Ltd. D

Ltd. E Ltd.

_______________ _______________ _______________

_______________ _______________

Activity Date
Select Project (spend area) for pursuit Aug/2000
Conduct preliminary diagnostic (high level) Sept/2000
Present project for discussion on this project Jan/2001
Scope
Resources
Benefits
Strategy

Announce Project January, 2001

Appoint Team Leader January, 2001
Hire external assistance January, 2001
Compose Team January, 2001
Initial Meeting January, 2001
Finalize Scope January, 2001
Objectives
Roles
Schedule
Work Plan

Preliminary Schedule

The following is a rough guideline of the schedule that will be followed in order to
achieve the desired results within the six-month time frame estimated for the
completion of this project. We are calling February 1, 2001 the effective start date,
with the period between now (January 8th) and February 1st as the time to prepare
and set up the processes needed to gain an effective start. We anticipate that this
project will be completed by July 31, 2001. The following assignment will be
completed by Allfreight Transportation and the Pursuit Team, consistent with the
company’s Six-Step Strategic Sourcing Methodology.

Step 1: Assess Opportunity

A high level preliminary diagnostic revealed that there is potential for savings within
the freight departments of the member companies. We are assembling a team
comprised of representatives from each of the member companies to support the
effort of securing savings and administrative enhancements. The initial activities
will be as follows:

A) January 8 – 26, 2001

Finalize the contract between Allfreight and the various parties to the
enterprise wide program, and gain the deposits needed to fund the start up of
this project
Gain Letters of Authorization from each of the companies for Allfreight to act
 on behalf of the member companies regarding freight and freight issues
Clarify who will be the Team Lead and the Operating Representatives on the
Pursuit Team
Confirm the purpose and mandate of the team and the roles of participants
Identify the internal customers within the group
Commence the development of the Service Questionnaire to identify the
internal customer needs
Establish the lines of reporting and approval for the project
Establish the lines of communication for the project
Develop the game plan to gain the data needed from each of the member
companies for each type of freight they incur
Arrange for the flights necessary to meet with parties from the different
companies involved, and to obtain the freight data

B) January 22 – February 9, 2001

Meet with the Pursuit Team members

Secure lists of personnel within each company
Gain copies of all carrier contracts for every mode of transport within each
company
Get the freight spends of each company within the group, broken down by
carrier
Identify areas where potential “Quick Hits” are available and key in on these
Complete the service questionnaire and have it ready to distribute out to the
field offices of each company
Establish the plan to distribute the service questionnaires to each of the field
locations and get them back, complete and on a timely basis
Visit the Head Offices of the five companies to meet the various people
within each and to initiate data collection
Commence photocopying the invoices within each company to gain the
necessary data (two to three week job, occurring simultaneously at each of the
various companies involved). This should overcome variations in accounting
procedures, coding errors or financial systems that don’t capture volumes or
unit costs (weights and lanes)

Step 2: Assess Internal Supply Chain

A) February 9 – March 1, 2001

Rank the modes of transport based upon volume, spend and the strategic
needs of each member company
Clarify the specific types of transport involved throughout the entire program
and build the preliminary lists of carriers to be approached within each mode
of transport
 Follow up on the service questionnaires to ensure that all are completed and in
house by March 1st, 2001
Commence data entry with a team of Allfreight personnel (this will take
approximately three weeks and needs to be completed by March 1st)
Develop the plan for each of the Operating Representatives to map the
administrative processes of their respective companies. Customize a written
template (mini-manual) of how to map these processes and distribute these to
the Operating Representatives for execution
Build the template for the RFP Process

B) March 1 – 15, 2001

Analyze the completed service questionnaires (and subsequent discussions

with different parties within the member companies) to clarify the strategic,
the structural and the logistical issues involved in improving the freight and
shipping programs of each corporate entity within the group
Commence analyzing the data, including transport modes, shipping lanes
separate and collective volumes, and costs for each, starting with the areas of
largest potential savings for the group
Start developing options and alternatives, both on a micro level (within each
mode of transport) and at the strategic level (for each company overall) in
order to better achieve the desired shipping, service and savings results
Operating Representatives to continue mapping the administrative processes
(to be completed by the end of April, 2001)
Prepare the variations of the RFP to go out to the carriers within each of the
modes of transport (to be completed and ready to go by March 15th)

Step 3: Assess Supply Market

A) March 15 – 31, 2001

Confirm the list of suppliers available for each mode of transport,

commencing with the largest areas of freight spend, and those modes most
critical to the operations of each member company
Meet with the main carriers to be included in the RFP process (from the group
of somewhere between 80 and 120) for the most strategic modes within the
approximately 25 to 30 different modes of transport
Follow up on the progress of mapping administrative processes
Continue to unfold potential strategies on freight program improvements
(brainstorming and alternative-building)

B) April 1 – 30, 2001

 Collect back the initial carrier responses
Start gaining a good indication of the potential carriers for each mode of
transport (though at this point in the process the rates will not yet be in line
with where they will ultimately need to be)
Clarify the service levels available from the carriers, and their flexibility for
exceptions and special circumstances
Seek out the second level of carriers needed in those modes of transport
where the initial responses were insufficient (or unimpressive) to achieve the
desired service enhancements and rate reductions

Step 4: Develop Sourcing Strategy

April 1 – 30, 2001 (cont.)

Reconfirm the scope of the project
Based upon the initial responses from carriers, determine desired outcomes
Compile and quantify the opportunities to each company, and the group
overall
Confirm the strategic targeted carriers and develop the negotiating strategy for
each
Complete the mapping of all administrative processes
Commence analyzing where technology improvements will assist to
streamline the admin. processes. Overlay this with the technological
capabilities of the carriers currently in the running, and add new potential
carriers as needed to achieve the blend of favourable rates, flexible services
and strong technological capabilities

Step 5: Implement Sourcing Strategy

A) May 1 – 31, 2001

Work through the negotiations with the carriers and short-list the carriers in
each of the modes of transport
Complete the negotiations with many of the carriers, with negotiations well
underway with the remaining ones
Commence designing the routing guides
The components required from the different field locations identified
Regional differences identified
Templates completed and awaiting the finalized data (for 100 to 200
individually customized guides)
Continue to identify and clarify the administrative improvements that would
streamline the processes within each member company
B) June 1 – 30, 2001

Finalize the negotiations with all carriers

Get all the agreements with all carriers set up and signed off, with each
separate corporation within the group (separate contracts with shared rates and
service levels)
Build and complete the plan to change carriers in those areas where changes
have been deemed to be necessary
Complete the plan for the roll-out of the routing guides, including:
Identifying who will present the new program to the various field locations
for each company within the group
Training the presenters of the new program
Development of the support materials necessary (PowerPoint presentation,
etc.)
Logistics and timing
Finish the routing guides
All content confirmed
Build each guide
Finalize the administrative improvements and prepare a plan for their
implementation within each member company
Quantify and record the various service enhancements within each mode of
transport, for each company within the group
Build the monitoring and compliance components into the system and
document these, as necessary

Step 6: Institutionalize Sourcing Strategy

July 1- 31, 2001

Present the new program to the various field locations for each company
within the group
Distribute and review the routing guides
Implement the carrier changes
Confirm that the compliance measures are in place
Initiate the administrative improvements
Confirm that the service enhancements are being achieved
Complete any documentation necessary for the new program to run
effectively
Implement the monitoring and compliance components into the system
Revisit the scope to confirm satisfactory completion of the overall mandate
Declare the project complete

Fees
Allfreight will be paid on contingency fee agreement, plus authorized
disbursements. The basis for payment is support by the sharing of the actual savings
between each member company and Allfreight.

Agreements will be negotiated with major suppliers for a two-year period

ABC Enterprise Group will receive 5o% of the actual savings achieved in the
first year and 100% of the savings in the second year.
Allfreight will receive 50% of any savings that is secured on behalf of the
ABC Enterprise Group member companies within the first year.
Allfreight will require two advances from each member company. These
advances are deducted from future commissions payable to Allfreight.
Allfreight will receive an initial advance from each member company of
$10,000 (+GST) at the start of the freight project.
Allfreight will require an additional advance from each member company of
$10,000 (+GST) within 60 days from initiating this freight project (estimated
at March 31, 2001).
Approved disbursements will be billed monthly and reimbursable at cost.
Taxes are extra were applicable.

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