Interstate Resources achieved significant efficiencies in its paper packaging supply chain by getting closer to its customers and by adopting a robust TMS system. The company produces 350,000 tons of kraft linerboard and 180,000 tons of recycled corrugated medium per year at its two container board mills. It also manufacturers corrugated sheets and boxes at its network of facilities throughout the East Coast.
It recorded transportation cost savings of about 12 percent from two initiatives over 18 months. The first – implementation of a customized TMS – improved business intelligence through better reporting and streamlined invoicing at two manufacturing facilities. The second initiative was a fleet cost reduction at a single manufacturing location. All of this was accomplished by learning what the customers of Interstate Resources needed, and then developing responsive, efficient services. These initial successes are being followed up with a roll-out of the TMS to several other Interstate locations, and adoption of optimized management at warehouse locations for a more strategic supply chain the would bring additional cost optimization and continued customer satisfaction.
With trucks and drivers in short supply, Interstate Resources, Inc. – a leading paper packaging supplier – was satisfying customer demand, but costs were rising and it was challenging to meet pick-up and delivery schedules.
“There was a perception within our company that we could get more value and greater efficiency in our supply chain,” says Rick Faust, vice president, Primary Product Sales, Supply Chain and Logistics, Interstate Resources. “We just weren’t sure how to do that without disturbing our valued customer relationships.”
The company produces 350,000 tons of kraft linerboard and 180,000 tons of recycled corrugated medium per year, and produces corrugated sheets and boxes in its converting operations located throughout the East Coast. Interstate enjoys a reputation for excellent service.
“The biggest challenge,” Faust says, “was to find a carrier who would understand the requirements of our customer base. As an example, our Asheboro, North Carolina manufacturing facility ships corrugated sheets to customers who have stringent delivery requirements. We might get a next-day order, with a delivery time of 7 a.m. That doesn’t mean 6 a.m. And, it doesn’t mean 8 a.m. It means 7 a.m.”
In the end, Interstate was able to realize its business objectives and achieve an important added benefit – improved customer service. It did all this with a new 3PL supply chain partner who evaluated the operations of Interstate from the ground up. The new partner, Landair, implemented a TMS system that reduced transportation costs by approximately 12 percent over 18 months. Additionally, fleet cost reductions have yielded savings of approximately 14 percent, and improved warehouse management has been implemented at key locations.
The first location Interstate tackled set the stage for potential improvements across several of the company’s manufacturing facilities. At the Asheboro location, the company had high demand for deliveries on Monday, with volume trailing off through the week. About 25 trailers full of sheets were needed on Monday, but only 12 by Wednesday.
After studying the situation, Interstate and Landair discovered that many customers could actually accept dropped trailers on Saturday and Sunday for product that was needed on Monday. In other cases, Interstate and Landair worked with customers to adjust their receiving requirements so they could more easily process staggered deliveries. Landair took this information and developed new shipping patterns that cut the number of trucks needed for optimal performance down from 35 to 17.
With that success under its belt, Interstate worked with Landair to implement similar efficiencies at the following locations:
- Columbia, South Carolina, which recorded a 14 percent fleet cost reduction in 2016
- Lumberton, North Carolina, which underwent a successful transition to more efficient fleet and warehouse management practices in an extremely tight timeframe
- Jackson, Mississippi, where a 60-day implementation of a new distribution model incorporating dedicated fleet and warehouse management optimization was accomplished without any service failure
Overall, Interstate now enjoys 99.9 percent on-time delivery rate for its time-sensitive customers, and 100 percent service on all add-on, ASAP, and changed loads.
These successes opened the way for adoption of Landair’s TMS at Columbia, South Carolina; Riceboro, Georgia; Cambridge, Maryland; and Reading, Pennsylvania.
Interstate can now better manage its supply chain operations and make adjustments as needed by analyzing Landair’s monthly savings dashboard. At Columbia and Cambridge, the TMS is also utilized to streamline invoicing.
“We have improved business intelligence, lowered transportation costs, and improved inventory visibility thanks to the system’s better reporting,” says Faust.
He credits the close working relationship between Interstate and Landair for continuous supply chain performance improvements. Utilizing information from the TMS, a joint team analyzes freight data, organizes transportation bids to drive efficiency, and generates reports that provide a clear picture of performance.
Faust says there is one other factor that has been critical to the success of the relationship with Landair – culture.
“Our partners at Landair are all very busy people,” Faust says, “but they are all aware of our business and take pride in what we have accomplished together. It seems that everyone at Landair has a personal stake in this, and we can feel that.”