Optimizing Transportation and Fleet Management to Lower Freight Costs and Improve Customer Service at a Chemical Producer
Client Context
A prominent chemical producer in North America faced rising freight costs following a recent merger and expansion of its production network.
Managing private fleets, owner-operator trucks, and common carriers across 27 factory locations led to complex transportation and fleet management challenges, pushing the company into “emergency response mode.”
Additionally, the company lacked an integrated transportation system, real-time visibility, and performance dashboards, making proactive problem-solving and real-time decision-making difficult.
Key Challenges
- Escalating freight costs due to merger-driven expansion.
- Lack of an integrated system for transportation visibility and real-time tracking.
- Decentralized load management, leading to inefficient shipping routes and truck capacity utilization.
- Non-standardized truck scheduling and dispatching processes across factory locations.
- Need to improve customer service by ensuring on-time and cost-efficient deliveries.
Approach & Key Success Factors
EFESO partnered with the client to analyze and optimize its Fleet Management Strategy and implement transportation improvements.
1. Fleet Management Strategy & Baseline Model Development
- Evaluated carrier and fleet deployment to identify inefficiencies.
- Examined detailed freight spend to uncover cost-saving opportunities.
- Assessed inbound raw material backhaul for potential optimization.
- Reviewed lease and carrier contracts to identify renegotiation opportunities.
- Developed a baseline transportation network model and a target model with future improvements.
2. Transportation Optimization Initiatives
- Converted common carriers to private fleets or owner-operators.
- Optimized the production network to ship products from closer plants.
- Improved trailer capacity utilization to reduce empty loads.
- Consolidated fuel programs for better cost efficiency.
- Enhanced backhaul planning processes to maximize truck utilization.
- Established transportation KPIs and dashboards for tracking performance.
3. Transportation Management & Centralized Planning
- Implemented centralized planning for transportation scheduling.
- Standardized load planning processes across all factory locations.
- Evaluated and selected a Transportation Management System (TMS) for future implementation.
Results
Transportation dashboard
Implemented and performance review process for real-time visibility.
15% reduction
Achieved $7.0 million in annual freight cost savings, representing a 15% reduction in total freight costs.
Enhanced
Customer service through improved logistics efficiency and on-time deliveries.