Ericsson gains control with Pagero Freight Solutions

A system that never fails

At present, Ericsson is the largest buyer of airfreight in Sweden and one of the biggest in Europe. A gigantic logistics apparatus like this obviously entails a number of challenges, and dealing with these requires having control.

Control of the distributors, the transportation methods and of the costs, these are just some of the areas necessary. Furthermore, the goods need to be delivered quickly; the customers have little patience when waiting to put the goods into operation.

“So far, we have never failed to deliver our equipment to the correct destination. Wherever the location is in the world, we have the tool that ensures that our network of distributors delivers,” says Carl Westman, in charge of Processes, Methods and Tools at Ericsson Distribution Logistics.

“The solution that Pagero helped us to develop is equipped with a number of predetermined quality controls to filter out inaccuracies and ensure that we can feel secure.”

Joint project

At the beginning of the millennium, Ericsson took a strategic decision to outsource the physical part of distribution, thereby placing great responsibility for the actual transportation on their third-party logistics providers, Distribution Service Providers (DSP). At the same time, Ericsson chose to retain the strategic management of distribution centrally in Kista, Stockholm. To gain the control required over the enormous amounts of data generated by the logistics operations, a solution was needed that not only had the capability of following up routes, invoices and costs but one that could also analyse if the costs were reasonable. Ericsson chose Pagero Freight Solutions with functions for Reports & Analysis Services; a solution that has been in operation since 2002.

A joint project was promptly initiated to develop a sophisticated system to control information quality that would fulfil Ericsson’s requirements.

“This is extremely business critical for us, as decisions based on inaccurate information will likely lead to devastating consequences for us. The solution that Pagero helped us to develop is equipped with a number of predetermined quality controls to filter out inaccuracies and ensure that we can feel secure,” says Carl Westman, in charge of Processes, Methods and Tools at Ericsson Distribution Logistics.

Additions and updates

In 2004, the system was updated with functions to ensure data accuracy and quality and the joint development of the system continued.

“The latest addition to the system is a solution for performance management that simplifies and develops our capability of following up information,” informs Carl Westman. “Amongst other things, there is a function that produces special reports to show transportation trends, i.e. the proportion of goods sent by air, sea or road. The system enables employees to produce different alternatives for transport based on tailored reports and data.”

A function for change management has been added and supplies users with tools that enable them to go into the system and correct an invoice. Furthermore, a web solution has been created with the aim to decentralise the responsibility for gathering data to the local sales companies, which are now assigned the task of providing the system with information.

“Close to 50 percent of our transportation is organised by the local sales companies, therefore it is crucial to engage them in the system if we are to have control of the flow further down the distribution chain,” Westman concludes.

“Pagero is a business partner prepared to invest time and resources to assist us in developing solutions at a pace that agrees with our changing needs.”

Keeping track of costs

“Costs for transportation are a constant subject for discussion at Ericsson and the challenges are many. Even though we are all aware of increased fuel costs and shrinking profit margins, the opportunities to compensate for these factors in the distribution chain are few and far between. The driving force is not solely focused on reducing costs, but goes hand in hand with environmental awareness. The way forward is without doubt to find solutions that divert airfreight to other forms of transportation; to have a system in place that can handle breaking down information into such detail that the comparison of costs and time is possible. Ericsson has this in the form of Pagero Reports & Analysis solution.”

“Such logistics planning is difficult but not impossible. Our goal is to utilise surface transport in preference to airfreight as much as possible, and we are looking at a number of solutions. One would be to fly goods part of the way to their destination before transferring it to ship or train. Hopefully, rail freight services will develop more rapidly, so it can be used even for freights between Europe and Asia. For some countries, such as Kazakhstan, we already use rail, since it is clearly the best alternative,” says Carl Westman.

What happens next

Next on the agenda is an adaptation of the system since Ericsson is changing the cost model it utilises with its DSPs, thus placing heavy requirements on Pagero’s ability to handle new volumes of data.

“We have had an incredibly close and rewarding partnership over the years. Pagero is nimble and perceptive in regard to our challen