Transitioning To New Processes With A Vision To The Future with Daikin’s Candy Heien

Full transcript

Francis Adanza
Welcome to the Down to Freight podcast, where we sit down with transportation logistics and supply chain subject matter experts to discuss digital transformation projects. I’m the host of the show, Francis Adanza and it’s a pleasure to welcome Candy Heien, Logistics and Trade Compliance Manager for Daikin Applied Americas. Candy, it’s great to have you today.

Candy Heien
Thanks, Francis, and I appreciate your invitation in joining you today.

Francis Adanza
Awesome. I’m glad you can make it. Can you please tell the listeners a little bit about yourself, your company and what you’re responsible for?

Candy Heien
Sure. Daikin Applied Americas is headquartered in Minnesota, and we design and manufacture advanced commercial and industrial HVAC systems for customers around the world. Our parent company is Daikin Industries, based in Osaka, Japan, and is the world’s largest HVAC manufacturer with more than 90 manufacturing sites, supporting customers in 150 countries. My role at Daikin Applied is corporate logistics and trade compliance support at the headquarters in Minneapolis.

Francis Adanza
Awesome. So for those that aren’t as familiar with Daikin Applied Americas, can you provide an overview of your supply chain?

Candy Heien
Sure. We have several facilities, manufacturing facilities, in Minnesota. We have one in Verona, Virginia. And we have another plant in St. Louis, inbound and outbound supply chain involves shipping by various modes and trailer types to our plants and end customers. Most of our customer deliveries involve specialist equipment, which we deliver to either job sites or crane yards, very specialized, usually [crane off? 0:02:16] but LTL and UPS is also a big part of our logistics plans.

Francis Adanza
Great, thank you for that overview that provides some great context. So we’re here to talk about technology. Is there a recent project or current project that you’re working on that you’d like to share?

Candy Heien
Yes. For the last three years, we’ve been on quite a journey to improve our logistics management, improve services to our customer and our manufacturing plants. This journey included investigation and selection of a new 3PL partner. We now are utilizing a new TMS system to improve our ability to manage our logistics processes and costs. And this transition also included integration from our Oracle ERP system into this new TMS solution that was provided by our 3PL partner in which we shared dimensions ,weights, dock scheduling, appointments, appointment setting for our customers, because everything has an appointment and also management of our inbound shipments to our plants.

Francis Adanza
Got it? So when you started on this journey three years ago, specifically what were the problems that you’re trying to solve?

Candy Heien
We had a lot of them. We certainly were very probably 20 years of behind times. We had no visibility of our goods inbound or outbound. We basically saw shipments booked and shared spreadsheets. We had no idea when they were coming, when they were leaving. We had no idea of the costs to analyze shipments, frequencies or any of the activities related to them. Our customers, we’re no different than anyone else. They whether they were big or small customers, or we ship small or big things, they expect an Amazon experience in their processes. And we just were not able to provide that.

We also wanted to become a shipper of choice. Certainly, carriers are making a lot of decisions on who they want to haul freight for. And our transportation partners clearly told us we needed to improve our yard management, our appointment setting and our facilities. So we, really, in the last three years have gone through all of that. And now it’s really been a great experience, but we’re hardly done.

Francis Adanza
Definitely. Well, yeah, three years is quite a journey. Now as you look back on it, are there any areas or things that you’ve wished you would have done differently?

Candy Heien
We were so far back that I think we- all of our improvements were so welcome that I hardly think we could do much wrong. But what was important to us is that we really needed to find a true partner, not just a vendor or supplier who helped with that. And that really reduces your risk of your projects slipping. So they were experienced. Where we had gaps, they had experience. And I think selecting that great partner really helped that. Our outbound integration went extremely well.

So from our Oracle to the TMS went really well. We were not as successful on our inbound processes as much as our outbound. It’s difficult to control from the suppliers getting PO information, date, requirements, those things and our systems just didn’t- weren’t ready to support that. But we really see great promise with those now in the coming year because we’ve straightened around what we couldn’t really get integrated particularly well. So we feel really confident about that for the future.

We also- I think it’s important that you look for partners that bring expertise and support to the table. We’re really small logistics team for a company of our size, and we couldn’t have brought it up ourselves. I think you always feel, hey, we can do better, rather than using a third party. But I think the third party was important to us to get the system up as soon as we can, dealing with the business processes that we need to do and help us be better at what we did. I’m not sure we do that differently. But we do know how important that partner was to us. And we certainly are not finished yet.

Francis Adanza
I see that is probably a common theme that nothing ever really goes according to plan. There’s going to be some hiccups along the way, but it’s how you navigate those issues to get to where you’re at. And you touched on the solution being up and running. But there is still quite a ways to go. How have you been measuring the impact on your business so far or like the before and after compared to three years ago to where it is now?

Candy Heien
The changes are significant. They really transformed our business. When I joined, I can’t believe the changes that we made. We now have logistics visibility across our business. Before, we didn’t. It was whoever had a shared spreadsheet, whoever made an email. But now we’re all looking at the same information at the same time, saying the same thing. And so I’m sitting at headquarters, and we can see the bookings and the cost, the products, the shipments, and then that information is then integrated back into our sales systems.

So now our customers and our customer service people see exactly the same information. And so now we are closer to that Amazon experiencing, where’s my products? When’s it going to arrive? Appointments been made. They see all that in our business system. So without us moving into a technology platform, we couldn’t share that. And it was it was really important to our various stakeholders. And really the efficiency gains that we’ve made from whether it’s on the shipping dock or a customer service or even logistics was really significant.

Our logistics group now has data and information that we can report and share with each facility every month. So we get together every month, we go through reporting or analysis. And it’s not just cost, but it’s about understanding our performance on pickup and deliveries. [Assets are real? 0:08:36] charges that we just really didn’t have any visibility to. And a recent gain is we’ve spent a lot of time optimization and utilization of our equipment. So using a platform that gives us that information where we can take on an initiative, see what we’re doing, measure it, report it and convert that into real dollars to the bottom line.

Francis Adanza
Wow, it doesn’t sound like quite a transformation. That’s fantastic. Congrats to you and your team for all that incredible work. So for those out there that are thinking about rolling out a similar solution, what words of wisdom would you offer?

Candy Heien
I think the sponsors of your project really need to be strong leaders with a vision to the future. When you’re deploying at multiple sites like we were at the same time, we pretty much brought everyone up within about a three-month time. So it was rather quickly. We got to five facilities up. One of them in another country. And you really have to find common ground. You have to ensure that processes are as similar as much as possible. And that was really a challenge. And our leadership was right there with us in the room. We worked out what’s the right process to do, not the process that we used to do. And that was important.

You have to listen to the teams on challenges and find solutions. I think listening to challenges that you’ve had before and then certainly once you come up on the technology is you have to involve everyone. It’s not just a logistics project. It’s a supply chain project, and everyone has to be involved. And my last thing is you have to be courageous, you really have to understand where you’re going, know that you can make it there to get the heavy lifting done, and enjoy the success.

Francis Adanza
Thank you for that. You’ve made the significant strides to transform the efficiencies of your business, but you’re also doing a lot to improve your customers’ experience. Can you touch on that a little bit more?

Candy Heien
First one is really around track and trace. Our current technology is certainly is so much better where it is. And that means track and trace, where is my shipment? How is it doing along its way? The current technology that we’re using is just not yielding the results and the accuracy that we desire for [our mode? 0:10:51]. It’s certainly an improvement, but we want it to be better. I think it’s still- it’s really still too dependent on the driver in the company to execute consistently. And with our partner, we’re looking into other solutions. There’s lots of new technologies out there that are being introduced. And we are just keeping our eyes open. And really with a goal of understanding exactly where our products are all the time, not dependent on someone else, ensuring that the track and trace is on. And so that’s really important.

The other thing that we are working on is a dock scheduling enhancements for our shipping docks. We work in yards. We have very large equipment that we’re craning on to flatbeds and [inaudible 0:11:39] trailers. So we are wanting to move our dock scheduling experience to big screens, like the airport, where we want to see when the flights coming in. We want to see when it’s leaving, is it delayed. And so we’re really transforming our dock scheduler module to be more like that. And then so it can be put on big screens for our folks in our yards and our shipping docks or receiving docks. So they exactly see when shipments are coming in, when they’re planned to, someone’s late, running late, and they can plan their day and be more efficient rather than wondering where’s the guy? Is he coming in an hour or two hours and so those are two big initiatives for 2021. And we’re very excited about improving our business.

Francis Adanza
Awesome. That definitely sounds like you have your work cut out for you. Thank you so much.

Candy Heien
Thanks, Francis. Have a good night.