15th Annual NASSTRAC Shipper of the Year: TriMas centralizes freight, boosts bottom line

Sometimes the process of re-engineering supply chain operations results in incremental savings, while other times a company can make a huge, positive impact on the bottom line. You can safely place TriMas Corp. in that second category thanks in part to the work of Candace Holowicki, the company’s director of global transportation and logistics and a driving force inside the company’s Global Services Organization (GSO).

Recognizing the need to aggregate spending and find cross-business unit solutions, Dave Wathen, president and CEO of TriMas, formed the company’s GSO back in 2010 in an effort to level the company’s functional silos and gain better efficiencies. Tom Aepelbacher, vice president of the GSO, was then tasked to attack everything that was decentralized and communize as appropriate.

Aepelbacher identified freight and logistics as an opportunity, and Holowicki, a 24-year veteran of transportation and logistics, was asked to join TriMas with the mission to create an integrated logistics program within the GSO. Three years later, the company reports that the 46-year-old logistician has succeeded. 

In fact, the implementation of her Corporate Logistics Strategy has helped reduce freight spend as a percent of sales by 2.4 percent annually for the diversified designer, manufacturer, and distributor of engineered and applied products serving a variety of industrial, commercial, and consumer end markets worldwide.

For helping TriMas realize that significant boost to the bottom line through her ongoing logistics centralization project, Holowicki has been named the 2014 NASSTRAC Shipper of the Year, an award given annually by the association and Logistics Management to a shipper that has transformed operations through the implementation of best practices and innovative thinking.

Besides the annual savings, Holowicki says that she’s having a blast. “It’s been a lot of fun,” says the modest Holowicki. “And, I’ve gotten so much support from both corporate and our business unit leaders.”

Let’s take a look at the challenge that faced TriMas’ supply chain operation and the solution that Holowicki and the team implemented to help rake in the savings.

Cutting down the silos
Like many large corporations, TriMas is a large, complicated organization that can be difficult to manage from a service provider’s viewpoint. For instance, TriMas had 13 acquisitions in 2013, which is indicative of the corporation’s size and scope of operations.

TriMas is organized into six reportable segments: Packaging, Energy, Aerospace & Defense, Engineered Components, Cequent APEA (Asia and Pacific), and Cequent Americas, its North America hitch and aftermarket auto accessories company. With headquarters in Bloomfield Hills, Mich., TriMas has more than 6,000 employees at more than 60 facilities in 19 countries.

Prior to 2011, its nine strategic business units operated autonomously, and each chose its own transportation partners with little to no coordination. Locations were allowed to choose their own particular carriers with little regard to price, while claims were handled
differently at each business without a focus on continuous improvement. 

“It was completely fragmented,” Holowicki says frankly. And expensive. Before her arrival, freight costs were 7.2 percent of sales—a good rule of thumb for U.S. manufacturers is between 5 percent and 6 percent. “The company didn’t know there was a problem because no one was focusing specifically on logistics at the corporate level,” she says. “Nobody was adhering to any formal set of programs, everybody was doing what they thought was best for their own location.”

Holowicki set out to create what she calls “a hybrid between centralized and decentralized” logistics management. Her position was created by Tom Aepelbacher, who had designed the GSO to bring together the procurement, logistics, operations, and continuous improvement functional areas in an effective supply chain management approach to eliminate both the functional area silos and the silos between corporate and their strategic business units.

Holowicki immediately set a goal of transportation being no more than 4.5 percent of sales. TriMas hit that goal in 2012. Last year, it was 4.8 percent—slightly above the goal, but largely because of an expensive move in 2013 of its largest manufacturing site and distribution center from Indiana, to Reynosa, Mexico, and Dallas, Texas, respectively.

Prior to the centralization of logistics strategy, freight cost per pound in 2012 (without fuel surcharges) was 13 cents a pound. Year to date in 2014 it’s 11.2 cents a pound. “That may not sound like a lot, but given how many pounds we ship, it’s a big improvement,” she says.

In sharing best practices across the business units and centralizing logistics strategy, TriMas Logistics has improved shipping performance across the organization through tools such as outsourced freight bill audit and payment, a transportation management system, and a number of TriMas-wide requests for logistics services quotations.

These efforts resulted in a 2.4 percent reduction in freight as a percent of sales from 2011 to 2013. Here’s how the team at TriMas Logistics make it happen.

Rolling out the solution
Holowicki realized that the first step was a single logistics contact at TriMas for all modes and services. That improved relations with carriers and other providers by making it much easier to get to the correct contact within the organization—or to address any issue that crossed multiple business units. 

“Having a corporate contact to notify our logistics providers of newly acquired companies in order to add them to our programs and update the contracts was critical,” Holowicki says.

For example, when there’s a claim, or a payables issue that cannot be resolved at the business unit level, the provider or business unit can escalate the issue to corporate logistics for assistance or mediation. Holowicki worked with the continuous improvement staff to introduce the TriMas Operating System (TOS) into logistics to bring structure, cadence, and discipline to the logistics practices and to make them more uniform. 

In July of 2013, Alicia Lowry, a logistics analyst, was added to the GSO to develop and publish standard quarterly logistics key performance indicators (KPIs) for each business unit, as well as carrier scorecards for the LTL providers. Lowry came to TriMas from a 3PL, so she was ideally suited to step in to their decentralized organization and work across all modes of transportation. 

The logistics program within the GSO has centralized strategy and program design at corporate in order to leverage spending by mode across the business units; in turn, tactical decisions and execution are controlled at the business unit level. “We’re finding that the cooperative nature between corporate and the business units represents a best practice approach to provide the on-time service levels our customers require at the lowest possible costs,” Holowicki says.

Through the GSO, TriMas Logistics supports its business units in reaching a corporate requirement of 3 percent to 5 percent productivity gains annually. Through monthly conference calls and an annual Logistics Summit, TriMas Logistics now provides a forum to present business unit logistics achievements and share examples of best practices from across the corporation, as well as corporate training opportunities and cross training between procurement and logistics. 

For instance, at the Logistics Summit held in March, Ron Dill, director of operations for Cequent consumer products, presented an update to the logistics attendees on their improvement project launching “Box on Demand” at their South Bend, Ind., distribution center. “Now that Cequent consumer products has proved the concept, we have a great case study to share within our organization, and a proven process to replicate the success at another TriMas location,” says Holowicki. 

Key service providers are invited to meet with the corporate and business unit logistics staff during the annual Logistics Summit when appropriate. A recent Logistics Summit was held in Memphis in order to incorporate a tour of the FedEx World Hub as well as a meeting with key FedEx representatives. For a service provider, having a single point of contact at TriMas for contracting and business development is very effective. That helps in exploring opportunities across business units, or across functional areas, such as their procurement or sourcing groups.

“The TriMas Logistics staff is also helpful in identifying the correct business unit contacts and maintaining accurate location information,” says Holowicki.
 
Making it happen
To help realize the benefits she knew would be possible, Holowicki needed to go mode by mode. TriMas utilizes four primary transportation modes—parcel, less-than-truckload (LTL), truckload (TL), and ocean—to meet its logistics needs. Parcel was manageable. With just two major providers, this mode was not far out of compliance with TriMas’ logistics goals.

“Parcel was a way to get me in the door with our business units,” Holowicki says. “That was a pretty easy tackle. There were only a couple business units out of alignment.”

LTL was another story. It had 12 carriers under contract, but there was very little historical data being analyzed as far as rates, on-time service, claims, and other operational goals. In late 2011, Holowicki went out and met the logistics lead of every TriMas business unit to see what their complaints were, what was working, and what wasn’t working.

“Everybody was very open to telling me what they didn’t like,” Holowicki recalls. “We then started doing this via monthly conference calls with each business unit. We discussed how each carrier was performing and how new carriers were working with a carrier scorecard.”

After compiling actionable data from historical freight payment transactions, and feedback from each business unit, Holowicki began developing continuous improvement goals for each mode by business unit. By showing exactly how much money could be saved through utilization of the corporate logistics programs, business units could address the changes representing the greatest freight savings, which go directly to the bottom line.

Holowicki says that she was always conscious not to be too heavy handed and to make sure each business unit had sufficient opportunities to provide feedback. “We never said: ‘Here’s what we’re going to do.’ Instead, we said:  ‘Here’s an idea we think will work. Review the data and give us your feedback.’”

Holowicki also allowed for exceptions that made sense. For example, one TriMas business unit specializes in supporting oil and gas rigs, often in faraway places. A lot of LTL carriers in the TriMas preferred network of carriers didn’t go to those locations daily, so she allowed for use of other niche carriers in those geographic regions.

“We’re never looking for 100 percent compliance,” Holowicki says. “There are always exceptions; however, we need to find out whether they are true exceptions or just excuses.”

Ocean came next. Early in spring of 2012, TriMas performed a corporate-wide RFQ. However, getting accurate data proved to be the hardest part. Holowicki started with historical data, updated it, sent it to all nine business units for their input, and then to procurement to see what it was forecasting for the coming year.

“That was the best learn-your-new-company exercise on my part,” Holowicki says. “It was crossing over into the procurement side. I leaned on them because I couldn’t get data elsewhere. Now I share with procurement and our Lean [continuous improvement] unit. They have input, and we have a pretty good network to keep each other informed on what’s going on across the businesses.”

For it’s ocean needs, TriMas now utilizes one primary and two secondary non-vessel operating common carriers (NVOCCs) and freight forwarders. “Ocean is always more complicated than trucking,” Holowicki says. “LTL has accessorials, but ocean has a whole lot more differentiating fees and services; so we had our hiccups, but it eventually came together.”

Her goal going forward is to create consolidation of multiple business units’ products overseas before shipping to North America. That’s now doable because TriMas Logistics has visibility to the data for all nine business units, and they are sharing information across the enterprise to see what works best.

The last mode to tackle was TL because, as Holowicki says: “It was pretty ugly.” Before her reforms, TriMas was utilizing more than 200 TL carriers. Today, it’s still slightly less than 100, but 80 percent of its freight moves by nine primary TL carriers.

Prior to the changes, less than 20 percent of TriMas TL freight moved under contract, causing the company to miss out on volume savings through long-term contracts. Today, nearly all of its TL freight moves under contract.

Holowicki calls her TL reforms “a work in progress.” In July 2013, Lowry, their new logistics analyst, did an in depth analysis of each business unit’s TL usage. An RFQ is now done with primary carriers for new lanes, and if one TriMas business unit needs TL capacity it can often find it through a preferred TL carrier from another unit.

“The goal is to eliminate empty miles by creating round trips and three-way TL moves among different TriMas business units,” says Holowicki.
“That’s the Holy Grail: triangulation. We keep digging into the data and the operational business rules looking for opportunities. With increased visibility and advance load planning through our TMS, we’ll find it.”

Continuous improvement
As it stands now, Holowicki gives her programs an “A-minus.” She believes the most beneficial improvements have happened because she has an established logistics leader within each business unit.

“That’s been one of the biggest changes,” Holowicki says. “Instead of Joe calling corporate, he can call a sister company location in his area to discuss a problem or an opportunity. If the business unit logistics leaders can run point on solving cross-business unit problems or developing new opportunities for our programs, then I’ve done my job.”

At the annual Logistics Summit, the logistics managers from each unit give a PowerPoint presentation to teach leaders in other business units what’s working best. “Before, nobody saw these wins,” says Holowicki. “Now, if someone at one business unit wants to implement a project that was presented, we can then replicate it and get maximum results in less time. It’s best learning from each other rather than having corporate or a consultant telling people how they should do it.”

That cooperative approach to is always on Holowicki’s mind. “I don’t have to be the bad guy, and I don’t have to force anything,” she says. “Through quarterly reports and published KPIs, management and the business units know where and what the opportunities are.”

“When one group decides to be proactive and implement positive change, the cost savings is good,” adds Aepelbacher, the vice president of the GSO. “When you take those same best practices and spread them to all 60 operating facilities, the benefits are enormous and the opportunities are huge.”

According to Aepelbacher, that 2.4 percent reduction in freight costs as a percent of sales equals substantial savings, and the organization is on track to meet that goal again this year.

“Another critical aspect in the success of the GSO is that we do not take credit for the savings that we identify,” Holowicki says. “All of the credit for savings in our projects is assigned to the business unit that works with us and completes the project.”

She appreciates this more constructive approach due to the fact that earlier in her career she saw other corporate structures taking credit for any improvements and savings, making the business units look bad in the process. 

“In our model, the GSO is a corporate resource available to any TriMas business unit. As long as the business units find value in our programs and services, that’s all the verification of our value that is needed,” she says.