Optimizing Transportation and Fleet Management to Lower Freight Costs and Improve Customer Service at a Chemical Producer

Situation

A prominent chemical producer in North America faced a significant challenge of increasing freight costs due to the recent merger and expansion of production network. Managing private fleets, owner-operator trucks, and common carriers across 27 factory locations created complex transportation and fleet management issues, resulting in an “emergency response mode.”

Furthermore, the absence of an integrated system, transportation visibility, and performance dashboard made it challenging to proactively solve problems and make real-time changes.

Truck capacity, shipping routes, and backhaul were also suboptimal due to decentralized load management and non-standardized truck scheduling and dispatching processes at each factory location.

ARGO-EFESO’s Actions

ARGO-EFESO partnered with the producer to create a thorough analysis of their Fleet Management Strategy:

• Evaluated carrier and fleet deployment
• Examined detailed freight spend
• Assessed backhaul of inbound raw material
• Studied detail lease contracts and carrier contracts
• Built a baseline transportation network model and target model with future improvements

Next, we implemented action plans to optimize transportation including:

• Converting common carriers to private fleets or owner-operators
• Optimizing production network to ship products from nearby plants
• Improving trailer capacity utilization
• Consolidating fuel programs
• Improving backhaul planning process
• Established transportation KPIs and a dashboard

Finally, ARGO-EFESO worked with the producer to improve transportation management by:

• Setting up centralized planning
• Standardizing load planning process
• Evaluating and selecting Transportation Management System for future implementation

Results

• Established transportation dashboard tracking and a performance review process.
• Achieved an annual freight cost reduction of approximately $7.0M, which is 15% of the total freight cost.