Case Study – Oil and Gas

Let’s go and uncover some case studies to see how Four Winds helped major oil and gas partners turn logistical ideas into a reality

Summary

The client is one of the saudi’s most lean oil refineries, has worked with Four Winds Logistics (FWL) on several initiatives. As its lead logistics provider , FWL team of associates work closely with THE CUSTOMER to streamline operations and create and maintain a more centralized logistics network. Together, they uncovered several areas for real cost savings as a result of reducing inbound carrier discrepancies, eliminating unnecessary premium costs and reducing shipment overages. Plus, Four Winds implemented accountability procedures and advanced logistics management technologies to gain more visibility of its overall supply network.

Challenges

  • To develop, implement and operate a centralized logistics network for The customer
  • To maintain and elevate levels of safety compliance and zero incidents rate.
  • To provide The customer with real-time supply chain and financial visibility

Solutions / Results

  • Four Winds consolidated shipments to plants. Approximately 180 trailers ship to and from The customer facilities every year with most trucks at 90 percent capacity. Four Winds has reduced plant inventory by 15 percent.
  • Four Winds trained suppliers on a uniform set of procedures and logistics technologies. Stringent carrier requirements and a Carrier Rating System were implemented to measure carrier performance.
  • Four Winds implemented new logistics management technologies to gain real-time visibility of delivery status, routing schedules and productivity.

Getting Started

Four Winds Logistics began its relationship with The customer as lead logistics provider (LLP) for the facility in Saudi Arabia in 1997. At that time, all the customer plants managed its own logistics operations. A decentralized approach provided total control of logistics at the plant level, but presented costly redundancies in materials handling and transportation.

The customer conducted studies to determine the benefits of transitioning the company’s decentralized logistic operations to an outsourced approach. The decision was quickly apparent— outsourcing of the company’s logistics operations would increase both velocity and visibility throughout the network, as well as reduce supply chain costs.

Shortly thereafter, The customer selected Four Winds as its Supply Chain Solutions Provider. Under the contract, Four Winds would first work on the customs clearance part locally, only if successful the two partners would  centralize and manage all inbound materials handling for all the customer units.

Consolidating Logistics Operations

Four Winds immediately developed an aggressive logistics transition program with The customer. FW would provide The customer with a single point of contact for all logistics operations.

By working with individual units and corporate management, Four Winds established a baseline of current operations and outlined the proposed solutions. The new logistics program would establish a Four Winds Logistics Center that included the following core functions:

  • Network Design Optimization—implement a more efficient inbound materials strategy through Origin Consolidation Cargo Centers.
  • Carrier and Premium Freight Management.
  • Information Technology System Integration—achieve real-time visibility of supply chain shipments, schedules and orders
  • Finance Management—improve freight bill payment, claim processing and resolution throughout the supply chain

Upon development of this new plan, the FW/The customer team began evaluating The customer’s existing network design. The suppliers would make multiple deliveries of the same parts to different plants. A supplier would pick up a small load, deliver it to one plant, pick up another small load of the same parts and deliver it to another plant. Carriers with half-empty trucks would often cross routes with each other en route to the same plant. Aside from being highly inefficient, this design allowed for excessive inventory and storage costs.

To centralize transportation and distribution operations, Four Winds implemented a new design consisting of two Logistic Consolidation Centers. The LCCs would be a central delivery point for suppliers and outbound right out of customs. Different supplier shipments going to the same unit would now be gathered into trailers at the LCC. Loads would be consolidated and delivered on a scheduled basis to reduce the amount of less than truckload shipments (LTL). To meet Four Winds’ new transportation and distribution standards, many suppliers were trained on new uniform procedures.

For transportation and premium freight management, Four Winds’ goal was simply stated: maximize transportation service and safety, minimize wasted costs. FWL drivers were re-trained and required to meet specific safety, equipment and technological specifications; provide experienced and worked with the customer to undergo safety courses for them.

The new procedures required FWL to meet established route pick-up and delivery windows within 3 hours of the scheduled time. Additionally, FWL would supervise loading and unloading operations to verify order accuracy, adequate packaging and labeling, and freight damage.

The big challenge came with suppliers from outside the country. In particular from Europe and the United States. The solution came with partnership agreement Four Winds entered with major European and American partners to secure the quality and reduce the costs. This approach worked very well and insured a smooth flow of supplies.

 

When it came to the safety The customer put strict requirements in place and trained all Four Winds personnel on them. All potential incidents (near-misses) would be recorded and reported. Four Winds would issue corrective action reports for actions that negatively impacted The customer’s operations. If a third party carrier accumulated an excessive amount of incidents on their “scorecard,” Four Winds was prohibited from using it. These practices resulted in zero loss time injury with this account (LTI) since 1997.

Four Winds has implemented and still implementing several information technology solutions throughout the logistics network, including its Freight Forwarding Information System  and special GPS system for ISO tanks.

Before the implementation of the centralized approach, the client was unable to gain a clear view of the financial status of logistics operations. With tens of suppliers handling more than 2,000 shipments, freight billing was complicated. As part of its Freight Forwarding system, Four Winds  would now provide drivers with a single set of paperwork procedures to ensure delivery documentation was collected and submitted to accounting on time.

 

The customer and Four Winds:

Entering a new decade of oil and gas

In comparatively short period, The customer and Four Winds had completely transitioned the logistics operations to a centralized network design. More than 210 inbound and 30 outbound trailers moved to and from The customer in 2016, with most loads carrying at 95 percent capacity. Most of the shipments are consolidated at the main LCC in Jeddah

Three thousands six hundred tons of freight were cross-docked in 2015, resulting in an inventory reduction at customer’s warehouse.

Suppliers and global offices currently operate under a single set of transportation and distribution procedures, enabling better service throughout the supply chain.

With uniform technologies, LCCs are able to monitor shipments, identify inefficiencies and a act upon them.

Four Winds  continues to deliver cost savings to The customer by continuous process improvement.

The customer has honored Four Winds with several awards, Today, with 23 years of fruitful partnership behind them, The customer and Four Winds continue to redefine the highest standards for logistics and operational efficiency.