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By Margaret Lindquist | September 2020
Even before COVID-19, 2020 was a challenging year for North American companies that depend on product shipments for their livelihoods.
Low unemployment and surging product shipments due to the strong economy exacerbated an ongoing shortage of truck drivers, itself the result of an aging driver population. Travel constraints and infrastructure damages due to Hurricane Harvey further curtailed the ability to transport product.
Then came the coronavirus outbreak. Sonoco, a $5.4 billion global packaging manufacturer based in South Carolina, was able to meet the challenge of an unprecedented pandemic.
At the beginning of the year, logistics leaders at Sonoco started to see an impact on their operations when the Chinese government ordered businesses, closed for the Lunar New Year, to remain shuttered. Initially, Sonoco logistics team members thought that the company’s Asian operations would experience the most serious impact. But US West Coast transportation activity also started to slow down considerably. Ships from Asia no longer were coming in, so little freight was going out of the state. “That disrupted the supply chain and created a ripple effect,” says Cleve Yarborough, Sonoco category manager for North America logistics.
As COVID-19 shutdowns started to spread across the US in early March, the company triggered an emergency plan it had created years ago in response to the SARS and avian flu epidemics. For example, Sonoco had stockpiled personal protective equipment, which it distributed to its operations and shared with healthcare workers and first responders in some of its far-flung locations. The plan provided managers with advice on how to perform employee health screenings, handle social distancing, and take other precautions to assure worker safety. It also outlined the tools that employees would use to communicate if they were unable to come into the office, including guidelines for organizing their remote workdays.
“It was nice to be able to pull out a playbook and say, ‘This is what we thought we’d do in this situation. Let’s follow this,’” says Roger Schrum, Sonoco vice president of investor relations and corporate affairs.
Also helping Sonoco navigate the disruption was its implementation, three years earlier, of Oracle Transportation Management. Before that implementation, logistics planners had to manually touch every one of the company’s shipments to food, pharmaceutical, and other manufacturers before it was tendered to a carrier. Now Oracle Transportation Management automatically tenders about 80% of orders without human intervention, allowing the team to manage by exception.
“We went from not even knowing what a face shield was to producing six million shields in our plants in Chicago and Mexico.”
“With 3,700 shipments a week, that’s 3,700 opportunities to get it right or wrong,” says Blake Faucette, Sonoco supply management and logistics process improvement manager. “The ability to see in real time what’s happening is critical.”
Amid the COVID-19 pandemic, Sonoco was even able to complete the final stages of its upgrade to Oracle E-Business Suite 12.1.3 ERP applications, which it eventually plans to run on Oracle Cloud Infrastructure and integrate with the cloud-based Oracle Transportation Management application.
The first major test phase of that upgrade started on April 1, as the IT team put 800 unique use cases through their paces. “We had an extremely high pass rate, and where failures did occur, we saw very quick and responsive remediation,” says Sonoco CIO Rick Johnson. “We met our testing timeline and executed a very robust test, 100% working virtually.”
Meanwhile, Sonoco’s operations were shifting in another unforeseen way. While some of the company’s factories were idle because they had been making packaging for businesses that were now closed, customers were asking Sonoco if it could use its manufacturing equipment to make face shields. This wasn’t a product the company had made before, but it had the plastic scoring machinery needed to do the work.
One medical supply company initially ordered 100,000 shields, which Sonoco made in three days, quickly followed by an order for 1.5 million more.
“We went from not even knowing what a face shield was to producing six million shields in our plants in Chicago and Mexico,” Schrum says.
Sonoco leaders offer three pieces of advice to other companies dealing with COVID-19 and other crises.
1. Devise an emergency plan. Sonoco provided a roadmap for groups across the company. For example, the web team already had set up a special website that the company used to communicate information about work-at-home support, what the company is doing to support its communities, and other pandemic-related measures. The plan also contained details about the company’s insurance policy terms and outlined the steps necessary to divert materials and staff to other plants.
2. Give remote work a chance. Before COVID-19, about 95% of Sonoco employees worked at company offices and plants. In a matter of days, almost a third of employees were working from home—not only upgrading the company’s ERP system, but also holding its annual meeting offsite. “Most people felt they were more effective working from home,” Johnson says. “It’s not really work from home—it’s work from anywhere.”
3. Rely on trusted partners. Sonoco and its shipping carriers have worked together for years and are committed to their mutual success. A key to that trust is the visibility into their networks that Oracle Transportation Management affords. For example, auto-generated score cards that Sonoco’s logistics managers use to measure carriers’ key performance indicators ensure that both sides understand what’s expected—and what’s possible.
The new system also let logistics managers focus on adding value, such as standardizing and improving emergency processes. “We try to have a two-way relationship with our carriers,” Yarborough says. “That's not only good for Sonoco, it’s good for them. We’re both invested in one another. That helps us weather these storms.”
Despite some apparel brands’ efforts to mandate better working conditions from first-tier factories in India, there isn’t much visibility into the increasing volume of subcontracted work.
Photography: Sonoco; Unsplash