2016 NASSTRAC Shipper of the Year VWR: Cuts time, increases savings
VWR’s redesign of its West Coast shipping operation incorporates a newly designed pool distribution strategy that reduces demurrage and drayage costs, improves next-day delivery and has greatly increased efficiency in the region.
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Time is money in logistics management, and any solution that reduces time in transit will result in transportation savings—regardless of mode.
She noticed that the company’s globally sourced containers from the Far East were collecting a little more than just dust while sitting at the Port of Long Beach, Calif. “We had a lack of real-time key performance indicators [KPIs],” says Patouhas, “and due to an increase in international imports via ocean containers, we were seeing a slower turnaround of our containers on unloading and loading.”
At issue were increased demurrage charges due to delays at the largest port on the West Coast. “That was the key reason for the change in West Coast operations,” says Patouhas. “Our demurrage charges were increasing, and, at same time, we lacked the ability to maximize our trailer cube utilization. We felt that this needed to be improved to have a more efficient and cost-effective operation—with no impact for our customers.”
VWR prides itself on its collaboration with customers and suppliers. And with that in mind, Patouhas and the company’s logistics team got cracking on a solution that embodies that practice.
According to Patouhas, a little extra planning produced a sound strategy to streamline its operation at the Port of Long Beach, resulting in far fewer delays and cutting costly demurrage charges. At the same time, truckload (TL) and pool distribution largely replaced more costly less-than-truckload (LTL) moves, again resulting in fewer delays and lower cost.
With the solution in place, VWR’s West Coast operation has improved shipping performance by continuing to meet the demands of next-day delivery service to customers in the region while also reducing expediting costs. As part of this new plan, VWR now also enables customers to track their recently placed orders online, providing full order status visibility.
For those improvements, as well as producing a 25% reduction in annual expediting freight charges in its West Coast operations as well as a 50% reduction in daily demurrage charges, VWR has been named the 2016 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.
A Penn State graduate with a degree in supply chain management, Patouhas, who commandeered VWR’s West Coast solution, just celebrated her fifth anniversary with the company. “I’m living the dream,” she says. “I started out in purchasing and moved into transportation, and I’m constantly learning and improving. It’s a great experience to work in transportation.”
Facing the challenge
VWR is a global provider of product and service solutions to laboratory and production customers, shipping more than 2 million products to nearly 300,000 unique customer sites last year. With over 9,300 employees worldwide, the company had sales in excess of $4.3 billion in 2015, with customers in the pharmaceutical, biotechnology, industrial, education, government and healthcare industries.
Due to an increase in international inbound ocean containers, VWR was facing steep increases in daily demurrage charges that are billed when containers were detained during loading or unloading beyond the scheduled time of departure.
About a year ago, VWR started reaching out with requests for proposals from a handful of dedicated TL carriers. It eventually got down to two finalists. Patouhas and VWR officials visited their crossdock facilities in California and made a decision based on the best service and time-in-transit metrics.
The program began last May and was fully implemented in less than 120 days. “Gena and the team did a fantastic job implementing this brand new solution under a very tight timeline,” says Dave Garell, director of transportation and logistics for North America for VWR.
The solution includes pool distribution from VWR’s distribution center (DC) located in Visalia, Calif., to final mile couriers that specialize in next-day delivery service in certain geographic areas. LTL and parcel customer orders that have numerous destination points are consolidated on a full TL shipment for the longest distance traveled and then dispersed into final-mile deliveries across the West Coast.
Instead of shipping direct from origin shipper to consignee, orders are shipped on consolidated trailers direct to regional terminals. There, the pool is offloaded, segregated and sorted by consignee, then reloaded onto local delivery trucks for delivery to the ultimate destinations.
In addition to the pool distribution, VWR implemented a crossdock facility provided by a third-party logistics provider (3PL) that allows globally sourced containers arriving at Port of Long Beach to be unloaded and palletized onto the backhaul trailers returning to its DC on a daily basis.
At the crossdock, VWR utilizes what it calls a “devanning” process—where a fully loaded, landed container is unsealed and its contents stripped—and freight is unloaded and sorted by SKU and lot number so it can be palletized onto backhauls to its DC for stocking.
VWR, with the help of its 3PL, chose Rancho Cucamonga outside Los Angeles for its crossdock location. The decision was quite strategic, since it’s close to the ports where drayage distances would be minimized. In fact, the move resulted in a whopping 50% drop in drayage costs. Adding even further efficiency, VWR created backhaul opportunities by making stops at local vendors for stocking inventory into its DC as well as pick up of customer returns.
“This operation allows us to meet the demand of next-day delivery to customers, and also allows us to have customer-focused programs, like utilizing plastic pallets,” says Patouhas. “Some customers prefer plastic to promote sustainability and ensure pallets are toxin free. With this operation, we’re able to deliver freight on plastic pallets and store them at the crossdock facility.”
In addition to promoting sustainability, greater use of pool distribution enabled VWR to reduce damages due to less handling of shipments during transit and reducing time by avoiding stops. VWR also consolidates LTL and parcel shipments, moves that maximize capacity per trailer, increasing operational efficiencies.
The result was operational excellence on the West Coast. VWR has similar supply chain best practices across the country and is consistently striving to optimize its large distribution network. As a result, VWR is able to serve next-day delivery to customers in the San Francisco and Oakland areas, Los Angeles basin, San Diego, Portland and Seattle.
Measuring improved shipping performance
VWR’s West Coast operation has worked to improve shipping performance by continuing to provide next-day delivery service to customers while also reducing expediting costs. The solution allows VWR to be competitive by exceeding customer service expectations, promoting sustainability, and enabling customers to track their recently placed orders online.
“The goal was to have as little disruption as possible to our customers,” says Patouhas. “We haven’t heard any negative feedback, which we took as a good sign.”
According to Patouhas, the VWR team has also improved relations with carriers by providing high volume business to its full TL carriers, as well as smaller couriers.
“The operation is now running more smoothly and efficiently,” Patouhas explains. “Containers are arriving at Long Beach in a timely manner, and we’ve reduced demurrage charges. Plus, we’re continually looking to improve our network an we’re working to maximize trailer cube and monitor equipment utilization.”
VWR’s West Coast operation now serves as an example of process excellence by effectively and efficiently meeting the needs of their customers for next-day delivery. “The way we’re running it today sets us up for future improvements and a better relationship with our 3PL provider,” says Mike Ceru, VWR’s director of transportation for the U.S. “It will enhance the customer experience not only this year, but for years to come.
About the AuthorJohn D. Schulz John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.
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