Sometimes in trucking, less is more—at least that’s what the logistics team at STERIS Corp. will tell you.

Two years ago the Mentor, Ohio-based pharmaceutical materials manufacturer was watching its sales and operations grow at a record pace; however, that success exposed several inefficiencies in its transport and logistics operations. As sales were taking off and shipments were increasing, the logistics unit realized that there was overlap in some geographic areas and not enough coverage in others. And to top it off, the unit was experiencing communications issues since it was using multiple carriers—there were too many parties involved in hand-offs at borders, at warehouses, and at terminal operations.

As a result, the STERIS distribution and logistics teams decided to take a top-to-bottom review of its freight needs, its existing carriers, and its LTL services. “We were looking for a way to better manage our LTL business,” says Jack Stablein, the company’s corporate transportation and logistics manager. “It wasn’t as organized and managed as well as we thought it could be.”

However, there was a subplot brewing: It was around this time that huge changes were taking place in the LTL sector. Carriers that were formerly one-region players were branching out into interregional giants; and the team knew that there were savings opportunities out there for the savvy shipper ready that was ready to break out of the “business as usual” mode. “LTL carriers that formerly were just doing regional operations were now taking on long-distance services,” adds Stablein. It was it was time to strike.

The moment of clarity came when the team examined the so-called “super regional” carriers—those serving multiple regions in order to compete with the services of the bigger national carriers as a result of rampant consolidation. By giving the market a closer look, the STERIS team discovered that its long-haul transit needs could now be met by the regional carriers who were expanding their regional boundaries to extend across the country.

“This service enhancement allowed us to leverage all of our business volume without fear of any service disruptions,” Stablein explains. “This [market] dynamic made the decision to make a change very viable.” In turn, STERIS decided to consolidate all of their materials and outbound freight shipments from several LTL carriers to a single, enterprise-wide LTL—and the savings are ringing up to millions.

Back when STERIS was experiencing its game changing growth, Chuck Biese, director of distribution and logistics at STERIS, recognized the LTL environment was changing in a way that perfectly suited his company’s need.

He knew that the shrinking market would now allow the company to consolidate all of its LTL moves with one proven provider instead of trying to manage a dozen or so separate relationships. “But we had to evaluate whether an enterprise solution would work,” says Biese.

According to Stablein, the company was seeking a true business partnership, not just a transactional relationship, with an LTL carrier. Certainly STERIS had the freight density to attract carriers: the company was shipping 55,000 LTL shipments annually two years ago; and that has grown to 110,000 shipments today. On a busy week the logistics team moves over 2,000 LTL shipments a week.

To find the solution, the logistics team invited its existing carrier partners to discuss the possibilities of a single-source, enterprise solution. From these discussions, the team quickly determined which carriers were serious about the opportunity to grow their business by finding innovative solutions. “The idea was to find the best possible service with a competitive pricing structure,” Stablein explains. “The most important caveat was that we needed a commitment to continuous improvement and innovative thinking from a partner.”

With a decision of this magnitude, the entire STERIS Global Supply Chain Group became involved as well as business leaders from every segment of its business. “It was very important for our supply chain group to get a 'buy in’ on this decision from all stakeholders in the process,” says Stablein. “More than just their approval, we wanted to grow and foster excitement around the idea of having a single partner working hand-in-hand with our whole business to make improvements across the board.”

STERIS already had been using Overnite Transportation for Southeast regional service; and with the UPS purchase of Overnite, the small-package giant set out to make the rechristened UPS Freight a national and interregional player.

The team began intensive interviews and bids with several carriers. However, Stablein, Biese, and the executive team say that UPS Freight stood out due to its commitment to service from the highest ranks of the carrier’s executives. Pricing and service enhancements were at the top of the list, but Stablein says that the one factor that really stood out was that UPS Freight was really involved from the top down throughout the whole process.

“Making a major consolidation of a carrier base is never easy and problem-free,” adds Norm Matusek, senior director of global supply chain management at STERIS. “Before we moved forward with the change, we sat down with the senior leadership of UPS Freight and laid out our expectations. At the top of our list was that carrier management was accountable and would personally work within the organization to make this transition a success.”

The deal was done: In 2006 STERIS decided to consolidate its LTL regional and long-haul operations and award one enterprise-wide contract for domestic freight to UPS Freight. The rollout was done in phases: The larger STERIS outbound facilities implemented it first, followed by the smaller facilities. The company’s supplier base was contacted through purchasing to close the loop from the inbound side. All told, it took roughly two months to roll out.

To better understand the implementation process, it helps to understand the company’s three major product categories of Capital (surgical tables, for example); Consumables (disinfectants and hand sanitizers); and Service Parts (replacement motors). Within those categories, shipment needs vary widely and, says Stablein, it was vital that UPS Freight understood the subtle differences.

Capital freight is mostly made-to-order and is shipped directly from manufacturer to customer in a direct line-haul method. Consumables are sent to a wider array of customers, most efficiently from a hub and spoke system from its major distribution centers in St. Louis and Mentor, Ohio, that feed four smaller DCs around the country. The service parts business is the most time-sensitive because of the nature of its customers—mostly hospitals and other emergency needs providers.

“It can get complicated at times,” says Stablein. “Freight from our three sectors has different service requirements. Some require lift-gate deliveries. Others have to be kept in storage. Some require inside delivery. It’s all directed by what our customer requirements are.”

For the most part, the process is largely automated. With only one LTL provider, the ease of automation in the process is greatly facilitated—instead of dealing with several carriers’ operating systems, now it was only UPS Freight’s way. As part of the enterprise solution, the carrier devoted two on-site coordinators—David Ward and Carrie Heffner—in the STERIS transportation department to micro-manage the business.

The coordinators handle all the day-to-day activities such as tracking and tracing, claims monitoring, and they facilitate complex delivery situations, expedited shipments, and returns along with every other problem or inquiry that would come about through the day. According to Stablein, dealing directly with on-site coordinators has given the shipper the opportunity to make changes and apply these changes quickly and effectively. “Before we made this change, each transportation project had to be approached with a multi-pronged plan,” he adds. “With only one carrier, initiatives are more feasible when there is only one party to work through.”

Many LTL shippers count their savings merely on the size of the discounts from their carriers. But STERIS has discovered that through a true partnership with one carrier, it can count the savings on multiple levels. “It is broader than just the rates,” says Biese.

For starters, STERIS is now able to get more deliveries in and out of its facilities due to new efficiencies in its network design and operation. “From a service perspective, we are covering longer transits in less time,” Stablein adds. “Our regional business still maintains 1-2 day coverage, but we are seeing more and more reductions on the national or coast-to-coast lanes that were at one point 4-5 days at best.”

The partnership has raised on-time delivery to an all-time high of 98.5 percent, up from 96 percent at the time of consolidation. And the list of benefits continues to grow. According to Biese and Stablein, the new relationship has allowed the logistics team to:

• shorten transit times on more than 10,000 lanes in just 24 months;
• improve management of returns;
• automate preparation, management, and tracking of multiple shipments using UPS systems;
• create a special labeling system created by the carrier to identify critical shipments and expedite their movement through the system;
• and launch a special process to speed documentation, making it easier for the company to close out books at the end quarters and fiscal year via timely proof of delivery on shipments.

From a pricing standpoint, Stablein says leveraging all of its business into one portfolio has resulted in savings in “double-digit percentages” of total LTL cost. “In addition to negotiating a competitive discount program, we see cost savings in other areas,” he adds. “In many cases, we have been able to circumvent the need for expedited shipments simply from the improvement in standard transit times.”

UPS Freight has also structured a labeling/sorting/segregating operation at their origin terminal for one of our high volume products that saves time and money, especially with hazmat shipments that require different documentation and handling.

For example: One of the company’s best sellers is STERIS 20 Steriliant, an organic peroxide but a hazardous material. UPS Freight and STERIS removed inefficiencies and developed a method where both sides could share in sorting and segregating savings and worked out a procedure to ship the exact number of cases to match up with a bill of lading. When UPS delivers it to the terminal, it applies the shipping labels with exact lot numbers and expiration dates to match.

Before the partnership, STERIS was applying the labels. But when the carrier took possession of the freight, it had to be segregated anyway because of its hazardous nature. So, by applying the labels, the carrier has helped the shipper eliminate one step in the process—and has cut a considerable cost.

Stablein says, the biggest savings come from having a dedicated source handling all of its transportation needs. “We have great sponsorship at the corporate level as a result of our partnership,” he adds. “We have a commitment to get things done and when the requests are difficult we’re able to work through problems even if the solution is outside the norm.”