1. Case Study: Distribution Sector
Negotiated freight discounts is only the beginning of the story
HR efficiency and greater management oversight compound freight cost savings to justify rollout
of pilot program
Opportunity
Faced with growing freight expenses and significant increases in
petroleum-based raw materials, AJ Adhesives, Inc.
(http://www.ajadhesives.com/) knew something had to give if it
wanted to stay competitive.
AJ Adhesives was formed in 1992 as an industrial adhesives
distributor in St. Louis, Missouri, focused on the packaging, paper
converting, woodworking and product assembly sectors. Putting the
customer first and maintaining its product focus has enabled AJ
Adhesives to consistently increase its customer base ever since.
Sister company Mid America Packaging was founded in 1996 to
handle the equipment side of the business, and the two work
together as a team to ensure manufacturing stays competitive in
North America. With branch offices in Seattle, Portland, Houston,
Dallas, Tulsa, Chicago and Indiana, AJ Adhesives continues to expand
its adhesive offering and geographic reach.
“Our purpose is ‘Holding North American Manufacturing Together,’”
says Vice President and Owner Jim Wiley. “We will do anything
anytime to keep manufacturing in North America. We needed a
complete value proposition that saves us time and money on all our
freight needs, so we can concentrate on our core business of
providing complete packaging solutions to our customers and realize
our plans of being the dominant distributor in North America.”
Challenge
AJ Adhesives was spending untold time and effort researching each
shipment to ensure they were getting the best rates available, as
freight expenses kept increasing along with raw material costs. Now,
AJ Adhesives does all this online with Broussard by imputing just a
few items, like zip codes, class and weights.
“Keeping our freight as competitive as possible has allowed us to
maintain our freight costs, passing the savings forward to our
customers,” Jim says. “That allows us to be more competitive than if
we were doing freight ourselves. We proved that during the pilot
program we did with Broussard in 2005. After evaluating the service
in our Southwest territory for a year and seeing the freight savings,
we began using Broussard company-wide.”
To answer another challenge – having the capability of communicat-
ing shipping information effectively on a timely basis to customers
and salesmen – Broussard devised a shipping acknowledgement.
According to Jim, this has set AJ Adhesives apart from its competi-
tors.
Solution
From a pilot program in one division in 2005 to company-wide implementation
today, AJ Adhesives has expanded Broussard’s services by four or five times. One
example that Jim cites is the misroute report, which the company started utilizing in
2008. After three weeks of misroutes in January that cost over $4,500, AJ Adhesives
went four months without a single misroute. A substantial savings in anybody’s
book.
“Broussard has become a valuable business partner for us,” Jim believes. “When we
have any problems or issues, we expect they will be handled professionally and
promptly. The employees at Broussard are very helpful at providing solutions. They
take the time to make sure we get everything we need, all the way up to Mike
Broussard being very accessible and easy to work with.”
In addition to providing negotiated vendor rates and full reporting on all freight
expenditures, Broussard pays freight vendors on the company’s behalf. AJ Adhesives
also utilizes Broussard’s Web site to create bills of lading and the sales acknowl-
edgement, which sports its own logo and provides vital information, including pro
numbers, shipment and expected receipt dates, weight, addresses, and product
numbers of items being shipped. “It has become a great sales tool,” Jim says.
“We’ve found our customers can’t live without it.”
For example, while one customer’s regular purchasing agent was on vacation, a
stand-in agent ordered the wrong product from AJ Adhesives. As usual, the sales
acknowledgement was e-mailed to the customer contacts, one of whom realized the
mistake. AJ Adhesives was able to get the correct product out the same day,
avoiding shutting down the customer’s operation and idling 50 employees as they
waited for the right adhesives to arrive.
Our customer service personnel now can see the best five carriers for any shipment,
saving our warehouse personnel the time and energy to try and figure out the best
rates for each movement. That’s huge.”
“There is a large value proposition to having a partner
like Broussard handle our logistic needs,” Jim says. “Not
only are they saving us money with increased efficiencies
on rate negotiations, but the time we save with their
technological advances is amazing.”
visit www.broussardlogistics.com