Fortune 500 Company Takes Control of Inbound Program
Tucker Company Worldwide provided a petroleum refiner oversight and control of its shipments—reducing freight costs, increasing flexibility, and ensuring safety compliance.
A household name in the petroleum industry was struggling to effectively manage its inbound logistics program. Each year, $4 million in freight spend was hitting multiple budgets—all of which were unaccounted for, as inbound orders were arranged by a combination of field engineers, managers spanning various groups, and third-party vendors.
Not only was the company overpaying, and often double-paying, losing millions of dollars a year, but they were putting mission-critical operational decisions in the hands of their suppliers who had little to no logistics expertise. There was no cost control, visibility, oversight, or adherence to important facility safety protocol. Many valuable shipments weren't even insured.
When Tucker Company Worldwide was asked to audit the company's freight expenditures and purchase orders, we identified several immediate savings opportunities. In addition to solving 100% of the undiscounted air, truck, and expedited freight bills, we uncovered systemic procedures that led to even more expensive errors.
Vendors regularly overspent via "prepay and add" terms and often charged for second (and third) shifts to make products that weren't required for weeks. Plus, lack of visibility during critical refinery shutdowns and turnarounds was costing time and money.
To get the company a better handle on its shipments, a simplified routing guide was initiated, and all freight requests were centralized through Tucker. This allowed the company to gain much-needed oversight and control. Tucker harnessed its buying power, historical lane data, competitive market analyses, and extensive stable of carriers to reduce freight costs, increase flexibility, and ensure 100% facility access, insurance, and safety compliance.
The second savings cut came when the company's procurement and transportation leadership collaborated with Tucker to support ongoing education and organizational behavioral change. Educating internal and external stakeholders of the problem, the need for change, and the solution that had been developed was key to the success of the program. As a result, Tucker saw a dramatic reduction in last-minute and "no-notice" freight calls by both the company and its vendors.
The next, most exciting, change came when the reduction in overall capital expenditures was realized. Tucker achieved this by addressing systemic issues, such as company personnel ordering goods to be delivered early "just to be safe." (As a result, some of their vendors were spending capital weeks sooner than necessary and adding expedited manufacturing and freight costs. Some chartered flights were booked unnecessarily for products that were not needed for days or weeks.)
By bringing these issues to light and implementing its cost and procedural controls, Tucker was able to reduce the true cost of the goods and cut inbound costs by 67% in the first year. Once the company's personnel understood the factors and behaviors that led to unintended, uncontrolled costs, they became committed to the efficiencies and savings the program provided. By the second year of Tucker's inbound program, costs were cut another 62%, and, in year three the company saw an additional 53% reduction in costs.