Operating as a supplier to the time-critical printing industry, ink manufacturer Siegwerk knew its customers placed a premium on timely product delivery. There simply was no forgiveness for late shipments. At the same time, the manufacturer had to maintain sufficient operating margins, which meant it needed to measure the logistics costs required to serve each client. However, that depth of visibility required intense data mining and analysis.
Unfortunately for Siegwerk, the supply chain data it was using needed to be more comprehensive and up to date. Siegwerk, which caters to the ink solutions needs of companies worldwide, clearly did not have visibility to all of the activities – and costs – in its supply chain. Furthermore, the company did not have a realistic picture of the cost to serve each customer because of the data.
Randy Rothfus, Siegwerk’s North American Logistics Manager, spent considerable time navigating through incomplete freight invoice data from a previous service provider. He would then have to make transportation recommendations to executive leadership based on this limited data set without any additional insight.
Complicating matters, as the company was trying to effectively manage its existing supply chain, Siegwerk was in the process of acquiring another company. Not only did Siegwerk have to address its own challenges with data, it had to integrate the operational processes of its new acquisition.
In addition to analyzing and integrating the companies’ supply chain data with limited visibility and tools, Rothfus also had to address day-to-day service issues such as late-arriving shipments. Because of the extreme focus required to make sense of the inaccurate data, response times simply had to be delayed. Rothfus knew this endless cycle had to be broken – but not at the expense of losing control of relationships with carriers and customers.
Rothfus and his team sought a solution that would help the company gain visibility to and management of its costs, and continue to provide top-notch service to a demanding customer base. The group made the decision to partner with Transportation Insight, based in Hickory, N.C., and to engage in what the 3PL calls a Co-managed Logistics relationship. As a co-managed 3PL, Transportation Insight had the logistics expertise, the ability to procure excellent freight rates and the business intelligence tools Siegwerk needed, all while Siegwerk maintained total operational control, according to Rothfus.
Using a phased approach, Transportation Insight developed and implemented a sourcing strategy to reduce Siegwerk's LTL transportation costs and give it visibility to other potential cost reductions and service improvements.
As Siegwerk began to realize LTL cost savings, Transportation Insight began collecting data on the company’s full truckload shipments by paying the invoices for them. That data enabled the provider to establish cost benchmarks before engaging on Siegwerk’s behalf to establish contracted carrier pricing.
The provider implemented Insight TMS, its web-based transportation management system. Insight TMS gave all departments – including customer service, purchasing, logistics and finance – visibility to critical transportation data. Siegwerk, whose North American headquarters are in Des Moines, Iowa, also worked with Transportation Insight to establish a vendor routing compliance program to effectively manage inbound transportation costs.
The day-to-day operations depended on the TMS to make effective costing decisions. The provider also provided data analysis instrumental in Siegwerk’s review of distribution center system costs, which helped dictate optimal DC setup across the continent.
After gathering Siegwerk’s freight invoice data through a proprietary auditing program, Transportation Insight’s Supply Chain Analytics group displayed the data in a highly customized interactive metrics package. That enabled Siegwerk to drill into its supply chain data from multiple angles at multiple levels. The group also performed advanced supply chain analysis at Siegwerk’s direction, such as determining which DC could most efficiently serve each customer, or whether Siegwerk should ship directly to customers that are considerable distances from existing distribution points.
“The beauty of our partnership with Siegwerk is that while we are intimately involved in the details, we are also collaboratively involved,” says Transportation Insight Chief Operations Officer Laura Easley.
Siegwerk execs can now determine, with great accuracy, the total cost to serve each of its clients. The company can manage margins with much greater effectiveness and respond much more quickly to changes in customer demand. Private fleet cost data incorporated into its metrics package enables Siegwerk to determine on a historical basis whether shipments in certain lanes should be moved using its private fleet or by purchased transportation.
Rothfus has an impressive list of milestones and achievements attributable to the partnership. “With the complete set of logistics data we receive from Transportation Insight, we have already identified and closed a DC that we didn’t need to effectively serve our customers,” says Rothfus. “I rely on the interactive metrics package to help us make strategic logistics decisions and determine other areas for supply chain improvement. We’ve been able to improve our service levels and response times to customers, and we’ve been able to decrease our inventory on hand by 14 days, a $7m annual savings.”
Rothfus says the 3PL's Client Services team is an additional reason for maintaining the relationship. “Before we see the data, they’re analyzing it, applying their experience and making recommendations on where we might consider shifting the manufacture and distribution of our products to best serve our customers. They’re really a big asset to our team.”
Siegwerk has also taken advantage of the provider’s value-added warehousing offerings. For instance, needing to provide more expedited service to a major customer in Houston, Chicago and on the West Coast, Siegwerk used Transportation Insight's extensive warehouse network develop local presences quickly without the expense of having to purchase brick-and-mortar facilities.
Transportation Insight acts as Siegwerk’s international freight forwarder by helping with export shipments and ensuring export regulation compliance.
The partnership is truly Co-managed Logistics, says Rothfus – Siegwerk has all the information it needs and all control is in its hands. “Transportation Insight provides a vast level of real-world knowledge and experience to help us identify and implement ‘best case’ solutions,” says Rothfus. “Our company is much stronger due to the supply chain visibility they provide. We are making better decisions that positively impact our costs, inventories and service.”