Pilot Air Freight: The Sky's The Limit
Business Forwarding cargo
Key Business Executive CEO Richard G. Phillips
Key Technology Executive Eugene Malcolm, executive vice president for technology and operations
Project Customer self-service Web site.
Objectives Offer freight bill entry and shipment tracking services comparable to those of larger transportation companies like FedEx.
Technology Used Web development using Microsoft technologies. Most recent update tied to a customized version of Air-Trak, a freight management package.
How it gave edge over bigger companies Gave Pilot equal footing in Web services to customers, making it possible to compete head-on with rivals of any size.
A lacquered wooden propeller hangs from a wall in the lobby of Pilot Air Freight's headquarters in Lima, Pa. But the company owns no planes.
Pilot won a "carrier of the year" award from Wal-Mart this year, placing it in the company of Yellow Transportation and 10 other companies who excel at carrying cargo. But strictly speaking, Pilot isn't a carrier, either.
Pilot is a freight forwarder, procuring air and ground transportation on behalf of its customers, and piecing it all together into a coherent service. Typically, Pilot works with local trucking companies and airlines such as American, United and cargo specialist Kitty Hawk.
But Pilot is not a typical freight forwarder, either. Most of its 98 locations in the U.S. and Canada are owned by a local franchisee. In Miami, for example, franchise owner Javier Torrens leases warehouse space in an industrial park about seven miles from the airport to handle imports and exports. He delivers items such as flat-screen TVs for Wal-Mart.com.
With sales of $250 million last year, Pilot is a little more than 1.5% the size of FedEx. But it has more than tripled its revenue from $73 million in 1994.
One key reason: Its portal, Co-Pilot, which offers customers the same kind of freight bill entry and shipment tracking capabilities as FedEx or United Parcel Service. For instance, a customer that sends hundreds of shipments can log in to Co-Pilot to see the status of each one or get details on a delay.
"More than anything else, from a sales perspective, we're trying to eliminate reasons why someone won't do business with us," says Eugene Malcolm, Pilot's executive vice president for information systems and administration.
Level Playing Field'">
A 'Level Playing Field'
So if competitors take orders and track shipments over the Web, Pilot must, too. And the Web makes it possible for Pilot to provide competitive customer service, even if it can't match the breadth and depth of technical infrastructure that exists at FedEx, UPS and other large transportation companies. "Before the Internet, it was impossible for a small or medium-sized company to compete with them in the area of technology, but now we've got a whole new level playing field," Malcolm says.
Pilot also depends on its data network to keep freight moving as smoothly as FedEx does. Even though delivery truck drivers typically aren't Pilot employees, the contract truckers must follow Pilot's procedures, such as providing proof of delivery within an hour. The network allows the company to monitor how well the franchisees enforce its standards.
Malcolm joined the company as a programmer in 1986, working on a revamp of the company's core systems. In the process of moving from Prime Computer hardware to Digital Equipment VAX servers, Pilot's programming staff created a custom management system for everything from accounts payable to shipment scheduling. Malcolm emerged as a project manager and spent time with the franchisees, trying to understand what information and functions they needed. Now he oversees both technology and operations.
Today, Pilot is phasing out the VAX system, known as PACE (Pilot's Automated Customer Exchange). Its replacement is Air-Trak, from Chuck Schubert & Associates of Livonia, Mich., which runs on IBM iSeries servers. With its graphic screen displays, the software promises to simplify training and improve worker productivity.
But Air-Trak had to be customized to accommodate Pilot's franchise structure. For example, Pilot had to add code that would calculate the royalty franchisees pay on every shipment they handle. Pilot tried to get the vendor to make the changes, but found that was taking too long. So the forwarder had its own programmers do the work, even though it meant hiring specialists in RPG, a database programming language Pilot hadn't worked with before.
Pilot also first turned to an outside contractor to build its Web site, but ultimately moved most Web development in-house. "We realized the only way to get any consistency with this was to keep it 100% internal," Malcolm says.
Lead Web developer Chris Baxter remembers the turning point in the fall of 1998, shortly after he joined Pilot's systems department. Pilot wanted to make a small improvement to an early version of its shipment tracking system: allow customers to add their own tracking number to each shipment. The contractor quoted 40 hours of work, at thousands of dollars, Baxter says. "I said, 'Hey, I can do that in a couple of hours,' and from that day forward I was our Web programmer."
But Pilot didn't really start to profit from its Web capabilities until Co-Pilot was introduced in January 2002. Since then, monthly volume of online orders has climbed from under 450 to 9,223 this June.
"We're trying to eliminate reasons why someone would not do business with us"
Customers use Co-Pilot to enter shipment orders, track shipments and configure e-mail alerts. "Without that application, we would not have the volume of shipments we have today," Malcolm says.
Larger customers such as Wal-Mart send orders via electronic data interchange, rather than enter freight bills directly into Co-Pilot.
But Wal-Mart employees can still use Co-Pilot to get reports on how many shipments are delivered, in transit or pending. And many of Co-Pilot's e-mail alert features were developed specifically to meet Wal-Mart's requirements. When Baxter calls up a listing of Wal-Mart.com deliveries, many are coded red to indicate they haven't been delivered. By clicking through to see the notes associated with the first shipment on the list, he is able to show the typical reasonthe consumer who placed the order is away from home and will call for delivery when he returns.
A more flexible version of Co-Pilot will be introduced this fall, based on Microsoft's .NET technologies. If a customer wants a 60-day shipment history automatically generated and e-mailed each day, that's feasible. If the customer wants to download the data and manipulate it in its own database, that will be easy, too.
The new Co-Pilot also links to the same DB2 database Air-Trak uses. However, only a handful of Pilot locations have converted to Air-Trak. That means PACE and Air-Trak must continually update each other's customer, shipment and financial information by exchanging records of every transaction in Extensible Markup Language (XML) format. Pilot introduced Air-Trak at the Baltimore terminal last summer, then paused to work out glitches in working with PACE. Now, Pilot is converting a new location every couple of weeks.
The integration is tight enough that there's no rush to close the old system, Malcolm says: "Without integration, we could have done it a while ago, but it would have been a lot more painful."
Whether in operations or technology, Pilot's challenge is to fit all the pieces together so the seams don't show.