SUMMARY
The subject of this case study is a mid-sized plastics distributor. Burned by lackluster support from its previous 3PL, this company sought new tools and better processes for managing its supply chain. We boosted freight billing accuracy, saved staff time by automating complex reporting tasks, and radically boosted the company’s analytical capabilities. Then we backstopped their shipping operation with truckload and international shipping support, saving them even more time and money. Total supply chain savings: Something north of a million dollars per year.
COMPANY PROFILE
The company distributes a wide range of plastic sheet, rod, film, tube, and associated products. Their distribution operation encompasses over 80 stocking facilities scattered across the US, catering to both a commercial and a residential customer base. This company's supply chain is exceedingly complex and multifaceted, with close to 20,000 SKUs across its complete product line. Before this company began working with IL2000, its freight operation was buried in byzantine logistical complexity. No single isolated freight variable was to blame here. Theirs was more a challenge of how to run a tight ship (well, a fleet of tight ships more accurately) in an ocean of practical uncertainties.
PAIN POINTS
- The company's previous 3PL had seriously underperformed. Prior to working with IL2000, their previous 3PL had been unable to correctly code freight transactions to the company's many branches of operation. The fallout had a few moving parts. First, the freight team was billing the wrong distribution locations. Fixing that recurrent problem wasted time. But that problem spilled into a significant secondary challenge. As the team scrambled to resolve the 3PLs billing errors, a growing pile of unallocated bills had accumulated. The billing department was getting further and further behind. Compounding all of that, their 3PL was unresponsive and offered limited guidance on how to move forward. The company was aware that opportunities to save real money on freight were passing them by.
- Their supply chain was complex. This client had over 80 stocking facilities and 70 distinct profit centers to track. The company's capacity to track, report on, and analyze its shipment was groaning under the pressure of that dataset and on the verge of organizational collapse. The best their previous 3PL was able to achieve was a monthly report containing only bare data on transactions. And of course, these data difficulties spilled into a deeper strategy challenge. In the absence of timely information exchange, individual profit centers and the company as a whole were struggling to maintain a clear and cogent growth strategy.
- They were losing lots of money. The company simply didn’t have time to submit claims for the vast majority of carrier overcharges. They had too much daily logistics work to do and too little 3PL support behind them to have any capacity for claims work. No single small claim case was worth their time. The problem though was that each of these small claims added up to vast additional freight outlay.
CHALLENGES
The company needed support, tools, and time. Support from a 3PL to tame the freewheeling complexity of their supply chain. Tools to better analyze freight transactions and time freed up to shift their gaze from daily routine management to smart supply chain decision-making and future-proofing.
SOLUTION
Robust and reliable 3PL support mobilized
First, a bit of context about the 3PL industry at large. The overwhelming majority of 3PLs build their service around a few fixed points: A rigid software platform for handling shipments, bare-bones technical support, and a fixed and (usually quite narrow) set of freight support services. This client (like so many companies who find their way to IL2000) needed the binary opposite.
- The company relied on an old and deprecated API. They needed software that was sophisticated enough to handle deep supply chain complexity yet adaptable enough to play nice with an old and fairly limited software ecosystem. IL2000 managed the development of a third-party intermediate software solution that married our client’s existing system with our industry-leading transportation management system. The previous 3PL they’d worked with never bridged that gap. IL2000 could, firstly because our TMS is proprietary and secondly because we specifically designed it to allow deep customization.
- Their freight operation required true expert support. When confronted with the complexity of so many profit centers, our client’s previous 3PL simply threw up their hands in surrender. The company ended up with a huge backlog of unprocessed bills. When IL2000’s technology and people took over billing, our first task was to automatically map bills to shipping records and distribution facilities. What had been a manual process and prone to significant error was now fully automated, accurate and audit-ready. That meant our expert team of logistics advisers could swing into action analyzing exceptions, handling claims and optimizing workflows. A stressful billing situation that had been out of control was now calm and under control.
- They needed access to a comprehensive menu of freight services. With our client’s freight billing crisis resolved, our team got to work optimizing truckload and international shipping. Our full-service logistics suite equipped our client to save money in ways they hadn’t been able to consider previously.
Reliable deep-level reporting and analysis on tap
Prior to working with IL2000, our client produced a monthly shipment transactions report. This basic spreadsheet report fueled the company’s whole freight strategy. It took days to prepare and shone a dim and narrow beam of insight over an immensely complex supply chain. We automated their report preparation process. We also improved their reports to analyze shipments at each individual plant level, a granularity of insight they had not hitherto been able to achieve.
Time and money saved
In addition to giving our client new clarity over its complete shipping strategy, our reporting enhancements quieted down many daily time-consuming frustrations that had long plagued their supply chain. Internal merchandise transfers had been one of the company’s biggest operational challenges. These freight movements were not happening reliably, and copious company time was being sunk into tracking down delayed or missing shipments.
- Our reporting tools made internal transfers consistent, and freight operators were able to track transfers in real-time, greatly improving shipment reliability. This one improvement alone cut 5 to 10 hours of time outlay from this person’s week. And that’s just one person and one task!
- Weekly invoicing was now accurate, summarized and correctly populated with the right accounting codes, saving still more time.
- IL2000 leaped onto those carrier claims the company had left to languish. We caught up on their claims backlog and took over handling future claims. More money reclaimed. More time saved.
- Now their team had round-the-clock technical support. If a shipment strayed from the plan or if any of their freight team had a shipping question, they could pick up and talk to any of our in-house supply chain experts. No more hunting for support when they needed it. Our people were right there and available in real time.
These and a score of similar efficiency enhancements added up! Our client ended up with more time to think strategically and more energy to invest in running a tighter logistics ship.
RESULTS
- Freight audit savings of ~$100,000 in under six months.
- $397,000 saved in direct LTL shipping in under six months.
- Hundreds of personnel hours saved per month, saving money and improving overall company performance.
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