Leveraging Supply Chain Mapping Solution to Identify Key Logistics Savings and Reduce Transportation Costs by 15% for a Chemical Manufacturer

Nov 15, 2019

Chemical Manufacturing Industry Overview

Low feedstock costs and extensive investment capital have generated a series of new chemical projects in the US. While this growth is a boon for the chemical manufacturing industry, companies need to address existing transportation issues. New logistical challenges could impact the movement of new chemicals and prohibit the industry from realizing the full benefits of increased production. It could result in excess inventories, capital expenditures, and operating costs. Addressing these challenges will require the cooperation of all stakeholders, chemical manufacturers, and shippers for companies.

Business Challenges Faced

The client, a bulk chemical manufacturer wanted to find a new route to improve their transportation efficiency. It was spending over $50 million annually to transport tons of products across the US and Canada. However, there was no effective strategy and the client lacked the ability to optimize routes. They relied heavily on disparate data sources to map out their distribution plan. The database available lacked master data of suppliers and information about financial relationships and partnerships. They required much better visibility into their transportation processes to brings costs under control and improve the shipping strategy to save a significant sum of money.

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Our Research Approach

The supply chain mapping experts at SpendEdge conducted a comprehensive assessment that included interviews, current-state workshops, and a logistics management process evaluation. They identified the existing pain points, assessed the current state of the supply chain against leading practices, and calculated potential savings of a transformation. Also, they submitted a business case to the company’s managers to assist the client in its preparations for negotiations with vendors.

The supply chain mapping solution provided enabled the client to balance supply and demand and improve route selection based on lowest transportation cost. The insights offered helped in redesigning future processes covering end-to-end solution. Processes allowed the client to create monthly plans and perform in-month ‘what-if analysis’.  With new planning processes, shipping routes were optimized within normal planning cycle and on ad-hoc basis for any unprecedented risks.

Engagement Outcome

Today the company has identified six logistics savings opportunity levers and has reduced its transportation costs by 15 percent, thereby saving millions of dollars annually. The supply chain mapping study has empowered the client to achieve the company’s operational targets, identify key logistics savings opportunity levers, and improve supply chain planning capabilities beyond transportation.

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Importance of Supply Chain Mapping

  • Supply chain mapping improves visibility by showing buyers exactly who and where their suppliers are based.
  • It reduces the risk of suffering damage to companies’ finances, reputations and legal standing.
  • Investing in a supply chain mapping solution demonstrates to other companies that a company is committed to corporate social responsibility.
  • Provides suppliers’ location and enables companies to make better-informed choices.

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