Distribution and systems management are key for industry success. Companies rely on optimization techniques and analytics to streamline their operations and keep their business efficient, productive and cost-effective.
Bridging the gap between industry and academia, Dr. Malini Natarajarathinam, associate professor in the Department of Engineering Technology and Industrial Distribution at Texas A&M University, and a team of students partnered with Brenntag North America to do just that.
“The main goal of our project was to maximize the company’s distribution asset utilization and distribution network performance,” said Natarajarathinam. “The research team identified opportunities to improve network configuration in order to reduce cost, provided recommendations on hub locations, and required inventory levels to align with the company’s focus on transportation efficiency and to support current and higher customer service levels.”
A leader in chemical and ingredient solution product distribution, Brenntag has more than 530 locations in 74 countries – creating a network of innovation and distribution around the world. Brenntag North America, the branch of the company that operates in Canada and the United States, consists of 190 distribution locations offering more than 10,000 products.
Needless to say, finding ways to optimize and coordinate distribution and shipment sites is critical for such a company.
“The special characteristic of chemical distribution to transport back empty containers of various sizes for refills poses a challenge to transportation efficiency,” said Natarajarathinam.
Armed with a plethora of data, the team focused on Brenntag Mid-South, which handles Kentucky, Indiana, Illinois, Missouri, Tennessee, Alabama, Ohio, West Virginia, Virginia, North Carolina, South Carolina, Georgia and Florida. Considering the location and number of distribution hubs, suppliers and customers, as well as the demand for various products, the team created multiple computational models to compare the cost of distribution services and enhance operations within the nation.
“Brenntag was interested in reducing the logistics cost from vendor to servicing point,” said Tom Fidler, director of supply chain at Brenntag Mid-South. “Brenntag was utilizing a tool that selected the landing location for vendor material but were not able to understand the cost of choosing a different decision.”
Natarajarathinam said her team’s investigations and models led them to create two user-friendly and vital tools for Brenntag North America to utilize now and into the future. The first is a strategic tool that incorporated the results from every optimization model the team tested and demonstrated the benefits of each — allowing the company to better understand their current system of distribution.
“By identifying the vendor that provides the minimum transportation cost and the most optimal distribution network for transfers within Brenntag facilities, our strategic tool enabled them to compare options to reduce their transportation cost,” said Natarajarathinam.
The second tool, which improved upon an already available system, performed a real-time analysis for shipments and orders and identified which location would be most cost-effective for them to use, especially for transferring products between company warehouses.
“By being able to compare the costs associated with shipments, the material management team is able to make an informed choice as to where distributions should be made from and to, thereby reducing the cost of transportation,” said Natarajarathinam.
David Garner, senior vice president for Brenntag North America, said the Texas A&M research team worked through many iterations of Brenntag’s logistics tools in conjunction with their purchasing team and dealing with their proprietary computer system, and found the ideal solution for their organization. “The final product totally exceeded our expectations and will be a springboard for us to take these learnings and tools into other parts of our company,” he said.
“The Texas A&M team helped us build the system to properly evaluate cost in landing locations along with a tool enabling better strategic decisions on vendor material,” Fidler said. “Brenntag has implemented the tools and are starting to capture financial rewards.”