GG Freightways Case submit

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Case Study: GG Freightways (GGFRT) GGFRT is a regional transportation and distribution company in operation for over 30 years. The company serves major cities in the southwestern region of the United States. The ir headquarters

(1), terminals/warehouses (8) and maintenance facilities (2) are noted below.

Corporate Profile

Corporate Name: GG Freightways

Founded: August 1989 Headquarters: Los Angeles CA

Terminals/Warehouses (8): Los Angeles CA, San Diego CA, San Bernardino CA, Bakersfield CA,

Scottsdale AZ, Phoenix AZ, Tucson AZ, and Las Vegas NV Maintenance Facilities (2): San Bernardino CA, Scottsdale AZ

Number of Employees: 750 (includes truck drivers)

Fleet: 400 delivery vehicles (average of 50 per terminal) which include: 80 tractor/semi -trailer units,

160 box trucks and 160 panel vans Total Annual Gross Revenue: $35,000,000

Current economic climate: stable industry, highly competitive business environment, 6% profit

Future financial goals: 8% profit with 8% reduction in operating costs

President and Chief Executive Officer (CEO): Marissa Schmidt

To familiarize yourself with commonly-used shipping terms in the freight industry, visit this site and refer to it as you read the case study and assi gnments:

http://www.shipnorthamerica.com/htmfiles/glossary/gloss_shipterms.html

Current Business Operations

GGFRT operates 24 hours a day, 7 days a week. Sales personnel (40 people, five per terminal) visit

prospective customers to outline company capability, services provided and costs. When a customer

decides to use GGFRT they call the dispatch office with shipment information. Usually they FAX a copy of

the bill(s) of lading to a terminal with information such as origin, destination, product description,

weight and number of packages.

A dispatcher at a terminal makes a list of freight pickups and sends a truck to get the freight. To do this

they use the routing/freight optimization system to determine the sequence of pickups by zip code.

They use local maps within a zip code to map out the specific order of pickups since there may be

several in a zip code area. They have a performance goal of 98% of freight picked u p within 24 hours of

availability.

A driver follows the dispatch order for pickups. Many of the drivers complain that the pickup order is not

efficient. When they pick up an order they sign for receipt and either load the freight or guide the

customer’s forklift operators to arrange it properly in the truck.

After freight is picked up it is brought to the terminal where it is unloaded and sorted by destination. A

dispatcher then prepares a delivery ticket (again using the routing system) that is used to loa d a truck in

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the proper sequence for delivery. Some trucks take freight from one terminal to another while others

make local deliveries. Since some terminals are close to 12 hours away from each other, there are many

“out and back” routes where drivers meet halfway between terminals to exchange freight trailers, which

benefits drivers so they don’t exceed their permitted daily maximum driving hours of 11 per day . About

half of a terminal’s space is used on any given night. Dispatchers have a goal to turn fr eight around in

the terminal overnight for next day delivery.

When freight is sent out for delivery, the driver follows the delivery ticket order. Often, they are held up

at a delivery destination by traffic or by lack of available unloading space. This can cause the driver to be

late trying to make the day’s deliveries. Sometimes they get to a destination and the facility is closed

and they bring the freight back to the terminal for delivery the next day. It is unloaded and re -sorted by

destination. The dispatchers then add it to the next day’s delivery tickets.

The major freight volumes are between Phoenix, San Diego and Los Angeles (about 70% of total

volume). Trucks run at about 70% average of capacity between terminals. Local delivery volume is

heaviest in Los Angeles, followed by Phoenix and then San Diego. Local delivery trucks operate at about

80% full while pickups fill about half of the vehicles space. Some customers pick up and/or drop freight

at a terminal/warehouse, with their own equipment.

Truck drivers communicate with the dispatchers using two-way commercial radios. Some also carry

personal cell phones and use them if the radio is out of range. A few drivers also carry GPS devices to

help locate addresses. In general, the drivers are content with the company. Pay and benefits are good,

and they get overtime pay when deliveries run late. Complaints are few and mostly center around either

the sequence of pickup and delivery of shipments or vehicle maintenance.

The fleet is maintained at the main Scottsdale maintenance shop and at a smaller shop in San

Bernardino. Either one can handle minor maintenance and preventative work. Only Scottsdale can

perform major engine and transmission work. Overall the fleet is in good operating condition. All

vehicles are on a preventative maintenance schedule which places them out of service two days a

month, usually on weekends. Maintenance scheduling is a challenge because it can interfere with the

steady flow of shipments both between terminals and for local delivery. There are no “extra” vehicles in

the fleet.

Administration

The company management team consists of the President, Vice President of Operations, Chief Financial

Officer (CFO), Chief Information Officer (CIO), Sales Manager, and a Fleet Manager who oversees

maintenance and safety. They meet weekly to di scuss opportunities and issues and to plan for future

goals. Except for the CIO, the management team has been in place for many years

The president of the company just hired its first Chief Information Officer (CIO ), Lance, after the previous

IT Director retired. He comes from a nearby manufacturer who is also a major customer. At that

company he was Deputy CIO and primarily responsible for network operations and security.

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Business Strategic Objectives

At a recent meeting the management team decided to change the strategic plan for the business to

meet growth and cost goals. They highlighted three new strategies they want to employ to increase

profitability and grow the business.

1. First, they want to track the whereabouts of freight both in the terminals and on the trucks to

provide customers with accurate delivery dates and times;

2. Second, they want to improve the percent of loaded miles in their fleet to reduce costs by

coordinating the pickup and delivery of freight at the same time in the same geographic area;

and,

3. Third, they desire to provide warehousing services for customers who want to reduce delivery

time to their customers or company by having product available locally for pickup in warehouses

or quicker local delivery.

Federal/State Mandates

In addition, the management team wants to ensure that the company remains in compliance with all

applicable federal and state regulations. The ones they are most concerned about are:

1. The Sarbanes Oxley financial audit and reporting requirements;

2. A new federal requirement to conduct a vehicle safety check every 10,000 miles; and,

3. A Federal Motor Carrier Safety Administration (FMCSA) reporting requirement on the number

hours per day for each driver (or max per week, etc.).

CFO/CIO Goals

The CFO has been charged with the overall project. He has asked Lance to help with this effort by

modernizing information systems to support the new strategies. He has decided:

1. His first step is to update the IT strategic plan to link to the new strategies in the corporate plan.

2. Second, he wants to engage his customers in a proactive way to first, identify and prioritize IT

projects that will help meet the new goals, and then develop a set of requirements for each

project.

3. Third, he wants to decide on the best approach to modernize the information systems that will

meet requirements at a reasonable cost, and for this he will need to make some changes to the

IT organization.

Strategic Direction

As a small player in a large transportation market serving large cities, GGFRT ha s many larger competitors. They need to improve their alignment of IT with their business strategic objectives as

well as updating their operational processes and IT to become more efficient in serving their

customers and acquiring new ones.

Current Technology

GGFRT is using a mix of older technology products for finance and accounting, route optimization/

freight tracking and fleet maintenance. There are several projects already in the IT portfolio competing

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for resources. The CIO sees a major challenge in balancing available funding, IT staff workload and

project prioritization. The project nearest completion is the adoption of the Precise Financial Reporting

System to replace the aging finance and accounting system. It will be completed in six months. There are

two other projects under way, one for management reporting and one for a mobile application that

sales staff can use to show potential customers information on the fleet, distribution services available

and freight rates, and warehouse options, including a comparison to the competition.

The route optimization and freight tracking system is very important to the operations manager and

dispatchers. The current system allows the input of freight origin and destination information. This is

taken from a bill of lading which contains a plethora of specific information. When the dispatchers en ter

the origins and destinations into the system they are grouped by zip code. The dispatchers then decide

which zip codes will be loaded in a truck and in what sequence for delivery. This takes several hours at

night to accomplish and must be done as quickly as possible so trucks can be loaded and sent out in the

morning for delivery. Arranging shipment sequence within a zip code is done by locating each address

on a map and entering it into the system in the best order. Pickups are handled in a similar manner.

Freight tracking features are not yet integrated; this should be developed in the future to meet one of

the business objectives.

The fleet maintenance system contains information on each vehicle in the fleet. It includes all vehicle

specifications, a summary of all repairs, a preventive maintenance schedule and an inventory of parts on

hand. This information is entered by accounting clerks, mechanics, purchasing clerks and anyone else

who has time to do data entry. It is not as time consuming as the rout e optimization/freight tracking

system, but it contains information critical to fleet reliability. The greatest challenge is scheduling

preventative maintenance since it requires vehicles to be down for two days. The dispatchers do not

want the equipment taken out of service because it causes planning headaches. The relationship

between dispatchers and maintenance personnel is strained.

IT Organization

When Lance was hired as CIO last month he took a close look at the current staffing. The IT staff consists

of 24 people, seven of whom are programmers. The programmers are charged with all systems

development and integration work for the company. They have three projects in their current portfolio.

Their skill sets include SQL, .Net and C+ programming, and Web design.

There are eight helpdesk personnel who support the eight distribution terminals (one at each terminal).

They work independently. The remaining staff includes two network engineers, a financial systems

specialist (an expert in Precise Financial Reporting), a computer security expert, two shift supervisors

(who supervise the programmers, network engineers, financial systems specialist and computer security

expert at headquarters) and the CIO and his two personal assistants.

The IT staff supports multiple locations. At the Los Angeles headquarters/terminal there are 15 servers

(they contain all software and data; one stores a backup copy of the data) and 30 PCs for accounting,

marketing, IT, administration and management. The terminal/warehouse operations offices have eight

PCs for dispatchers, one for each of the maintenance offices, one for parts and one for drivers in the

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driver lounge. The other seven terminals have 10 PCs each and connect to headquarters by a virtual

private network (VPN).

IT Portfolio

Precise Financial Reporting System- This new system will replace the current finance and accounting

system. It is an off-the-shelf product that requires the owner to make modifications to interface with

other systems they may own. Two programmers are working on the project. One is setting up the

database and loading the software on servers. The other is le arning about the system to write an

interface with the route optimization/freight tracking system. A representative of Precise Financials will

train the accounting staff in its use . This will take about two weeks.

Management Reporting System- Senior management wanted to know financial information daily. Two

programmers have been working on a system to compile the data in a format they can use. They plan to

extract information from Precise Financials when it is ready but for now have focused on the current

system. They will be done in two months.

Mobile Marketing App- The marketing manager asked for an app that sales staff could use to show

potential customers information. This would include things like fleet photos and specifications; pictures

of the eight terminals and information about the distribution/warehouse services GGFRT can provide;

and a comparison of their costs using sample shipments with rates from competitors compared to

GGFRT costs. A programmer and the web designer are working on the project. It will take two more

months to complete.

The current design and development process is best described by the way it worked in the selection and

integration of Precise Financials. The CFO asked the (former) CIO to develop a new finance and

accounting system. The CIO interviewed large, respected companies and, after comparing their

capability to the current system, chose Precise Financial Reporting. Two programmers were assigned,

and a Precise Financial Reporting specialist was hired to work between IT and the finance office. The

CIO receives progress reports every two weeks.

Situation

When Lance was hired, he toured each terminal to see the IT setup and understand local business

operations. It was important to him to know just how each person used the systems. He spent time with

bookkeepers and accountants, dispatchers, drivers and terminal management. Since he came from one

of GGFRT’s customers he knew that customers could offer insight into business improvements that

would be good for both companies. He visited one large customer in each of the terminal’s area of

service to get feedback on how operations between them and GGFRT could be improved. His goal was

to see how he could translate what he learned into systems improvements.

Interestingly the most complaints came from bookkeepers and accountants. They said the system was

slow and data entry was tedious because accuracy was very important. If they entered wrong

information, it could cause incorrect billing (rates are based on weight and size), improper loading (the

wrong zip code could mean sending freight in the wrong direction unless a dispatcher caught the error),

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and more. They estimated current accuracy at about 95% but they had no way of knowing for sure.

Further, they complained about financial reporting and their ability to meet compliance requirements.

Reporting was mostly a manual process and data they needed from the system was not easily accessed.

Most of them had resorted to keeping small ledgers at their desks to track information they knew they

would need for reporting.

The dispatchers explained that routing wasn’t all that hard, just time consuming. The routing system

grouped all the shipments by zip code. They would take all the shipments in a zip code and look at the

weight and size (how much cubic space each one needed in a truck), plot them on a map and then put

them in delivery sequence. They thought most trucks left the loading dock full and that that the drivers

made adjustments in delivery sequence when needed. Pickups were a bit more challenging. Sometimes

they sent a truck out just to pick up freight and bring it back to the terminal. Other times they contacted

a driver to ask them to stop at a customer to pick up a shipment while they were making deliveries.

Since they didn’t know exactly how much space was available on the truck this was a hit or miss

situation. Drivers were left to decide if they could make it work.

Drivers were the most outspoken, probably because no one ever asked for their opinion. They were also

the happiest of employees (this might explain why they were non -union). They liked being able to make

decisions on the go and they knew the customers very well. In fact, they could call some of them if they

were running late and the customer would stay open so they could deliver or pick up a shipment. They

seemed to have favorite customers and often spent extra time with them talking about common

interests. Generally, they were good ambassadors for the company.

Terminal managers were under constant pressure. Their main goal was to get shipments into and out of

the terminal as quickly as possible. Delivery times were measured and part of their performance plan.

They knew the company had established three new strategies because they were explained in an email

they just got. Lance asked how they might provide warehousing services. Most felt they had extra space

and could take on some storage but keeping track of the shipments might be a problem. They had to do

this manually and the bookkeepers were the ones to keep the records. They felt more bookkeepers

would be needed but they didn’t know how many.

Lance also met with the maintenance and safety staff at the San Bernardino terminal. The maintenance

folks had a large workload and complained that they had a hard time getting equipment in the shop for

preventative work. They did not know when equipment would be available until the last minute so

scheduling was always a scramble because they needed to make sure mecha nics were available to do

the work. They had a lot of complaints about shifting work hours and the effect it had on their personal

lives.

The safety manager expressed concerns over driver hours of service. There are federal regulations that

limit drivers to 11 hours of driving at a time. Then they need to take an eight-hour break. The problem

was tracking the driver’s hours to make sure they stayed within the law. Dispatchers tried to help with

this when they scheduled pickups and deliveries but there was no easy way to do it and the results were

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often based on best guess. The safety manager who was ultimately responsible for compliance had

drivers turn in their hours each day but this was always after the fact.

Lance’s customer visits were eye-opening. Most of the customers had automated inventory systems and

could easily track products from raw material to finished goods. They knew exactly what they would ship

and when, usually several days ahead of time. Some customers however needed near instantaneous

shipping. They wanted same-day pickup in a lot of cases and fast delivery. In most cases, they were all

able to produce electronic documents such as the bill of lading and email or FAX it to GGFRT.

During his interview for the CIO position, Lance was told that the previous IT Director had left a good

foundation and that the staff seemed sufficient in number and appeared to be very capable. However,

since GGFRT is developing its strategies for the future, the staff must be able to support the business

strategies as well as the IT strategies that Lance would develop. One of the first things Lance did was to

interview each member of his staff. He discovered that the roles and responsibilities tended to overlap

and that morale among his staff was very low. Lance also interviewed the senior leadership of GGFRT

and learned that his staff was not meeting their expectations for service. The help desk was perceived

as being only somewhat competent and took much too long to respond to problems. Application

developers were very slow in delivering systems, and when the systems were finally delivered, they did

not reflect what the customers needed or wanted. Network outages occurred too often from the users’

perspective. Finally, the Chief Financial Officer told Lance that the IT costs need to be reduced.

Lance knew he had many challenges. He was determined to identify essential projects and then

prioritize them for management review. The outcomes would affect almost every aspect of the

business. His IT portfolio was about to grow, and her organization will need to change to meet the

challenges.

Your Task

From the perspective of the CIO for GGFRT, you will be completing many tasks over this semester.

• In the ITSP #1 assignment, your main goals will be to develop a new business strategic objective that you feel is one that GGFRT needs to accomplish. You will write IT Mission and

Vision statements and develop an IT Governance Board, select an IT Governance

Methodology, choose your team and discuss their roles on the board. You will also choose a prioritization tool to rank projects and di scuss criteria that is important while prioritizing

those projects along with a few other tasks.

• In the ITSP #2 assignment, your main goals will be to choose IT strategies, aligning them

with business strategic objectives from the ITSP #1 assignment. You will complete an IT roadmap of the current project schedule and add a new project that you will deem

important to GGFRT’s operations. You will discuss risk of implementing projects from the

CIO perspective and create steps of a Business Continuity Plan along with a few other tasks.

• For the CIO Memo assignment, you will discuss your leadership philosophy and management style, address IT strategies and discuss how each will benefit the business,

create an organizational chart based on the information pre sented above for the 24

employees in the IT Department, explain how a CIO Organization differs from an IT

Department, note Key Services (functions, positions) that will be included/eliminate in your

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new CIO Organization, create a new CIO organizational chart, and discuss key milestones (related to the Key Services’ section) for accomplishing your new CIO organizational

structure along with a few other tasks.

• In the IT Decision Paper assignment, your project will be presented (from the ITSP #2 assignment), the strategic alignment of your project to one of the business objectives (from the ITSP #1 assignment) and IT strategies (from the ITSP #2 assignment) will be discussed, discussion of where your proposed project would fit into the IT roadmap (from the ITS P #2 assignment) will be discussed, how your project will share data, integrate, or replace an existing or proposed system will be discussed, benefits the project will provide to GGFRT, requirements of the project, anticipated cost/size of the project, performance measures of your project and the system development life cycle steps of your project along with a few other tasks.

GGFRT is a fictitious company created for the IFSM 301 Case Study. 6/25/2019 for University of

Maryland Global Campus