High Touch, Blended Transportation Management Solutions Can Reduce Freight Costs

H.C. Starck, headquartered in Munich, is a global manufacturer of metals including tungsten, molybdenum, tantalum, niobium, and rhenium, high-performance ceramics, and thermal spray powders. Many of their make-to-order products conduct electricity but, unlike copper, are impervious to many chemicals. Not surprisingly, many of their biggest customers are electronics manufacturers.

H.C. Starck, Metals Manufacturer

In the U.S., they operate three plants: in Newton Massachusetts, Euclid Ohio, and Cold Water Michigan. The company’s products tend to be very heavy, and they usually ship less-than-truckload (LTL) in either dry van or flatbed. The lead times on their products are 14 to 20 weeks. As they near their order promise dates, they find they often must expedite shipments to keep big customers happy.

Mark Smolinsky, a Sr. Logistics Manager in the US operations, explained to me their journey to reduce costs without impacting service.  “Seven years ago, when we were owned by Bayer. Yellow Freight was our carrier for all three plants. We got quotes from leading 3PLs and were convinced we had great rates. One day this brash kid came in and said he could save us 10 to 14 percent.”

That brash kid was Dan Clark, the Founder and President of Kuebix. “We ended up giving him a try.  We didn’t realize that at the time they were just a three-person firm. He did save us 14 percent, though, about $360,000.”

Mr. Clark achieved this based upon a procurement event where he made use of his extensive knowledge of LTL tariffs. He asked for quotes based on a rather obscure tariff that was particularly favorable for shippers with heavy materials.

But the Kuebix relationship goes beyond procurement consulting. For H.C. Starck, this is a blended transportation management system and managed services solution.  Approximately every two years, Kuebix does a strategic procurement event. Kuebix continues to drive substantial savings from these events.

Next carriers are selected by lane, and the rates are entered into the transportation management system’s (TMS) route guide by Kuebix personnel. Kuebix TMS is used for both inbound and outbound moves.

Often, H.C. Starck tenders and executes loads. However, if there are rush shipments, or particularly complex shipments, the metals company calls Kuebix and Kuebix executes the moves. For expedited shipments, Mr. Smolinsky explained, “the Kuebix staff can often get us better rates on the spot market then we could get using the route guide.”

The rest of the process involves freight pay and audit. H.C. Starck pays the bills after Kuebix audits them for accuracy. The TMS solution is also used by both Kuebix and H.C. Starck employees for visibility, to make sure goods will arrive on time.

Mr. Smolinsky appreciates the customer service offered by Kuebix. The blended TMS/managed services approach means the transportation department can operate lean. Without this model, Starck would have to hire extra logistics personnel.

And every year Kuebix product development executives show up at Starck plants, sit down with the planners, and get face to face feedback on how their product can be improved. “We are no longer the biggest customer of Kuebix,” Mr. Smolinsky said. “Now there are bigger companies with more complex requirements than we have.” But that is all for the good. That means the product continues to be enhanced and that this new functionality is available should Starck ever need it.

Comments

  1. Interested to know about typical case study with Blended Transport Management.

    Dr Ram
    C : Boise

    • I’m not sure there is a “typical” case study. But we have written case studies at Logistics Viewpoints.

  2. Thanks for sharing this story. I have the same experiences, designing matrix sheets based on BCO/Shipper goods is often a good strategy, and it can pay off in therms of rates reductions of ~15% for the same service as before. Interesting also that you also go further to “close the loop” with TMS-implementation and making sure the newly awarded carriers are utilised, booked and paid according to contract.