In 2011, Dal-Tile and Transplace first discussed the idea of a transportation collaboration that would leverage Transplace’s market visibility to pair low-density freight shipper partners with Dal-Tile’s high-density ceramic tile shipments. The clear objective was to utilize transportation capacity more efficiently, reducing costs without impacting the underlying carriers’ profitability, and producing a sustainable and significant win for all involved parties.
Just one short year later, along with shipper partners Convermex, Werner, and Whirlpool, we won First Place for the Global Supply Chain Innovation Award jointly sponsored by the Council for Supply Chain Management Professionals (CSCMP) and SupplyChainBrain magazine.
It may seem a bit like a fairy tale, but it’s actually a true story, and a process model that we are focused to grow five-fold over the next two years.
From the beginning, Dal-Tile knew it would be able to illustrate considerable cost reductions if the right partnerships could be forged. The process has led to some internal as well as external transportation collaboration, all related to executing the optimum balance of weight and cube in a single OTR (over-the-road), IM (intermodal), or rail (boxcar) shipment. While we had to adapt to some unexpected events as the project evolved, we made some excellent decisions along the way, decisions that can be directly related to our success. Examples are:
- Recognized “Cubic Miles” Opportunity – Undoubtedly the most important factor, Dal-Tile understood the value of under-utilized cubic capacity and the impact of the extensive lengths of haul from tile manufacturing centers to distribution centers.
- Realized the Need for a Facilitator – While we understood the strategic opportunity, Dal-Tile also knew that no benefits could be derived without the right shipper partners in high-volume origin locations, like Monterrey, Mexico. Owning no “network” of shippers in Monterrey, Dal-Tile turned to Transplace after exhausting its internal resources as well as considering other potential 3rd party service providers. Having extensive operations in both Mexico and the US, Transplace was able to not only offer “boots on the ground” in terms of the Mexican market, but it also developed operational processes that facilitated Customs compliance in the trans-border environment.
- Defined “Ingredients” for Strong Partnerships – Dal-Tile and Transplace “profiled” the potential partner, based on the following characteristics/ingredients: product density; lane match; freight/operations compatibility; customs approach; product value; and fundamental “headset” towards cumulative benefits sharing.
- Collaboratively Designed & Implemented Solutions – After identifying and qualifying a potential partner, Transplace and Dal-Tile hosted a series of on-site meetings and ensuing conference calls to collaboratively design a comprehensive logistics solution, considering the needs of the two shippers. This also provided Transplace with the opportunity to incorporate services that neither shipper was able to provide.
- Execution – Overcame Obstacles, Delivered Results – The quality of the implementation is directly related to the experience and ability to anticipate potential issues in a complex multi-shipper logistics solution. The contributions made by each shipper and the facilitator were a key part of near flawless execution, frequently yielding 15%-25% reductions in net logistics cost.
A significant part of our collective success is also due to our approach in sharing benefits. As stated in the movie Wall Street, Michael Douglas’ character Gordon Gekko said “Greed is good,” probably because it provides motivation to pursue financial benefits. Where you have to check your greed is in terms of how it affects your collaboration partners. Understanding that Dal-Tile’s product density was the primary driver in making benefits available, the company knew that without interested and engaged shipper partners, Dal-Tile wouldn’t be able to realize any cost savings. Although Dal-Tile and Transplace had invested significant intellectual assets, benefits had to be shared 50/50 with introduced shipper partners. Transparency in terms of the cost model was also required so that all parties knew what the benefits were, how they were calculated, and where they came from. The cost model also functioned as an operational model, providing a basis to evaluate operational changes and subsequent downstream cost implications.
Feeling we have a tried and proven operational model, Dal-Tile and Transplace expect to implement six to eight additional partnerships in 2013, generating millions of dollars in logistics costs reductions as well as significant “green” benefits (congestion, fuel, tires, drivers, GHG and associated PM, etc.). As the breadth and scale of the collaborative network grows, it provides additional customs brokerage, transportation services, and cross-docking opportunities for Transplace, who continues to facilitate the collaborative relationships, providing a truly sustainable and competitively differentiated “win” for all involved parties.
Sonney Jones is Division Director of Transportation for Dal-Tile, a subsidiary of Mohawk Industries. He is a bilingual logistics professional with a background in the sales, operations, and engineering disciplines of the logistics industry. His operating background and experience spans much of the Americas, having worked for carriers such as YRC, USF, SAIA, Crowley Maritime/Logistics, and CSX Intermodal. Jones is a graduate of the Mississippi State University College of Engineering.