Negotiated freight discounts is only the beginning of the story
HR efficiency and greater management oversight compound freight cost savings to justify rollout of pilot program
Opportunity
Faced with growing freight expenses and significant increases in petroleum-based raw materials, AJ Adhesives, Inc. (https://www.ajadhesives.com) knew something had to give if it wanted to stay competitive.
AJ Adhesives was formed in 1992 as an industrial adhesives distributor in St. Louis, Missouri, focused on the packaging, paper converting, woodworking and product assembly sectors. Putting the customer first and maintaining its product focus has enabled AJ Adhesives to consistently increase its customer base ever since.
Sister company Mid America Packaging was founded in 1996 to handle the equipment side of the business, and the two work together as a team to ensure manufacturing stays competitive in North America. With branch offices in Seattle, Portland, Houston, Dallas, Tulsa, Chicago and Indiana, AJ Adhesives continues to expand its adhesive offering and geographic reach.
“Our purpose is ‘Holding North American Manufacturing Together,’” says Vice President and Owner Jim Wiley. “We will do anything anytime to keep manufacturing in North America. We needed a complete value proposition that saves us time and money on all our freight needs, so we can concentrate on our core business of providing complete packaging solutions to our customers and realize our plans of being the dominant distributor in North America.”
Challenge
AJ Adhesives was spending untold time and effort researching each shipment to ensure they were getting the best rates available, as freight expenses kept increasing along with raw material costs. Now, AJ Adhesives does all this online with Broussard by imputing just a few items, like zip codes, class and weights.
“Keeping our freight as competitive as possible has allowed us to maintain our freight costs, passing the savings forward to our customers,” Jim says. “That allows us to be more competitive than if we were doing freight ourselves. We proved that during the pilot program we did with Broussard in 2005. After evaluating the service in our Southwest territory for a year and seeing the freight savings, we began using Broussard company-wide.”
To answer another challenge – having the capability of communicating shipping information effectively on a timely basis to customers and salesmen – Broussard devised a shipping acknowledgement. According to Jim, this has set AJ Adhesives apart from its competitors.
Solution
From a pilot program in one division in 2005 to company-wide implementation today, AJ Adhesives has expanded Broussard’s services by four or five times. One example that Jim cites is the misroute report, which the company started utilizing in 2008. After three weeks of misroutes in January that cost over $4,500, AJ Adhesives went four months without a single misroute – a substantial savings in anybody’s book.
“Broussard has become a valuable business partner for us,” Jim believes. “When we have any problems or issues, we expect they will be handled professionally and promptly. The employees at Broussard are very helpful at providing solutions. They take the time to make sure we get everything we need, all the way up to Mike Broussard being very accessible and easy to work with.”
In addition to providing negotiated vendor rates and full reporting on all freight expenditures, Broussard pays freight vendors on the company’s behalf. AJ Adhesives also utilizes Broussard’s Web site to create bills of lading and the sales acknowledgement, which sports its own logo and provides vital information, including pro numbers, shipment and expected receipt dates, weight, addresses, and product numbers of items being shipped. “It has become a great sales tool,” Jim says. “We’ve found our customers can’t live without it.”
For example, while one customer’s regular purchasing agent was on vacation, a stand-in agent ordered the wrong product from AJ Adhesives. As usual, the sales acknowledgement was e-mailed to the customer contacts, one of which realized the mistake. AJ Adhesives was able to get the correct product out the same day, avoiding shutting down the customer’s operation and idling 50 employees as they waited for the right adhesives to arrive.
“There is a large value proposition to having a partner like Broussard handle our logistic needs,” Jim says. “Not only are they saving us money with increased efficiencies on rate negotiations, but the time we save with their technological advances is amazing. Our customer service personnel now can see the best five carriers for any shipment, saving our warehouse personnel the time and energy to try and figure out the best rates for each movement. That’s huge.