Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported a net income of $715 million on sales of $11.36 billion in 2006.
Cummins and Concentrek began building their partnership 2000, when Cummins sought to improve and redesign their inbound materials flow and improve supplier compliance. A Six Sigma project pursued jointly by Concentrek and Cummins resulted in Concentrek’s proprietary Inbound Freight Optimization (IFO) process. Moving from static inbound routings to daily dynamic optimization improved inbound visibility and predictability, and generated savings for Cummins of $9 to 10 million in annual transportation costs.
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"Concentrek’s solution provides Cummins with greater supply chain visibility and a lower total logistics cost. These advantages allow Cummins the ability to focus on their core manufacturing competencies.”
Mike McClelland - C.O.O at Concentrek
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One of the main challenges that arose during implementation was difficulty in achieving supplier compliance to specified order quantities and ship dates. To alleviate the problem Concentrek enhanced their optimization system from i2 Technologies to capture information directly from suppliers, reducing variability in shipping requirements and improving supplier compliance to more than 90 percent.
Through close cooperation with the Cummins team and innovation in approaching supply chain challenges, Concentrek was able to identify significant additional savings opportunities and implement solutions to achieve those savings. The result was a full-service transportation management program across multiple plants and Cummins divisions that served as the foundation for future supply chain initiative.
The culture of innovation and cooperation developed early in the relationship has fostered a continuing focus on new and creative ways to deliver cost reductions. “The main value that Concentrek provides to Cummins is project based savings,” said McClelland. “We are always dynamically changing and improving our processes to save them more money.”
Today, Concentrek manages more than $102 million of annual freight expenditures in all modes for Cummins Engine. Concentrek operations have expanded to include management of international trade lanes, off-shore consolidation, supplier managed inventory and foreign trade zones. Concentrek is committed to building relationships and delivering ongoing innovation and value– in short, helping their customer leverage the full potential of their supply chain.
