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No amount of complexities buried within one's supply chain can justify allowing costs to spiral out of control.
Arysta LifeScience Corp. is a prime example of a shipper with a myriad of tight requirements that can lead to excessive supply-chain expense. Ranked among the world’s top 15 agrochemical companies, Arysta finds itself grappling with a global network of customers, rapid expansion, a large number of hazardous materials, and the need to deliver many products within 48 hours or less.
For a time, Arysta seemed resigned to what appeared to be built-in and unavoidable logistics costs. The situation was solidified by a lack of internal resources and expertise.
Add to that the difficulty of securing the best carriers from a logistics standpoint. Arysta’s internal group was small, and the workload only promised to get heavier when the company merged with the agrochemicals unit of Chemtura, according to Angie Williams, operations lead for Arysta.
To get a handle on its logistics spend, Arysta turned to Capital Transportation Logistics, a unit of Ascent Global Logistics Co. CTL had already been working with sister company Macdermid, and was called in to conduct a study of all of Arysta’s transportation lanes.
The analysis led to a decision to outsource the logistics function. It was in keeping with Arysta’s “asset-light” business model, whereby the company relies on outside manufacturers in North America. “We don’t hire large numbers of people,” says head of supply chain Don Warren. “We try to hire fewer people who are very good at managing programs.”
Initially, CTL assumed responsibility for negotiating and managing Arysta’s less-than-truckload (LTL) activity, carrying out freight audits and payment, and providing management reports. Soon, though, the engagement broadened to include management of domestic truckload shipments, covering the entire process from booking and documentation to tracking and invoice auditing.
Today, CTL handles all of Arysta’s domestic LTL business and between 50 and 60 percent of its truckload activity, says Warren. Over the past year, the provider has helped to optimize inter-plant transfers, resulting in a greater reliance on cost-saving truckload carriers. Arysta has 18 warehouses spread through North America.
CTL’s initial challenge “was just getting our arms around the LTL piece of it,” says president Erin Verranault. The company took a phased approach to the project, looking for opportunities for rate reductions at the outset, then tracking both rate and shipment history through to freight audit and payment. CTL was also charged with advising the shipper on opportunities for realizing additional savings.
The ramp-up didn’t take long. From contract signing to go-live was a 30-day process. The work entailed bringing Arysta onto CTL’s LTL platform, negotiating rates, setting up the transportation management system (TMS) software, invoice auditing and reporting. But it took between four and five months for the full range of CTL’s services to kick in.
In addition, CTL aided in transitioning Arysta to an automated routing guide and invoice-payment process, streamlining the logistics process between the shipper and its many suppliers.
For a company that had been living with high logistics costs for years, the results were significant. Within the first year of the engagement, CTL had helped to slash expense by 27 percent. Average shipment cost dropped from 15 cents per pound to 11 cents.
In the course of that first year, CTL helped Arysta to identify more than $100,000 in potential savings, including a reduction of between 20 and 25 percent in LTL expense, and nearly $70,000 in cost avoidance through better freight auditing.
A prime objective of the partnership was boosting Arysta’s control over, and visibility of, the carrier-management task. The shipper gained a deeper understanding of its existing logistics processes, including its overall spending on inbound transportation, and vendor requests for both LTL and truckload. As a result, it was able to evaluate such requests, as well as spending on expedited shipments, on an individual basis.
“Now when buyers request expedited shipments, CTL sends those requests to us for pre-approval,” says Warren. “We can look at what is causing those expedited shipments, and ultimately transform business practices based on having more visibility.”
Managing Custom Jobs
Much of the savings have come through the implementation of standard operating procedures for day-to-day carrier management. But Arysta also needed help in managing its custom programs, which require extensive planning in collaboration with customers, vendors, warehouses and carriers. Such efforts used to be carried out by Arysta in house; now they’re handled by CTL’s operations staff.
Arysta also takes advantage of CTL’s Vendor Inbound Management Program, which allows vendors to work directly with the logistics provider on routing, bill-of-lading creation, shipping and order tracking. Arysta keeps track of the activity through CTL’s online TMS system.
In 2016, CTL processed around $9m in invoices for Arysta, covering truckload, LTL, international freight forwarding and warehousing. All of those formerly manual processes became automated with the help of the provider’s I.T. systems.
Both partners see opportunities to deepen their relationship in future. Already, says Verranault, they engage in quarterly business reviews and an annual “summit meeting,” where the principals take a longer view. CTL services that might be added at a later date include parcel and international shipments, she notes.
“I can’t think of anything I’ve asked them to do where they didn’t step up to help,” says Williams. “There’s never been a ‘no’ answer to anything. That’s a true partnership.”
Warren praises CTL’s expertise in seeking continued performance improvements. “There’s no rigid process we’re thrown into,” he says. “It’s just a good group of people who are really professional, and will roll up their sleeves to help us do anything.”
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