Value Added Logistics Services in Latin America

The Client

This oilfield provider has worked in the Latin America region for more than 80 years, contributing to the development of national oil and gas industries. This success is attributed to their understanding the importance of integrating local knowledge with global expertise to meet the diversity of challenges, from heavy oil fields in Venezuela and Colombia to the presalt plays in Brazil. Providing the technology and expertise necessary for optimal production in the deep waters, mature fields, and tight gas reservoirs across Latin America, they strive for excellence in each and every operation and always in a safe and environmentally friendly manner.

The Need

As their Latin American business expanded throughout the years, focus and resources were allocated to areas vital to the development of the core business; production and manufacturing product essential to the oil and gas industry. This left the Supply Chain and Logistics areas in need of support and technical resources.

specific Areas of need

• Carrier Contracts were disjointed and out of date
• Specific costs and accessorials were not accounted for in the contracts
• Corporate contracts were not uniform and standardized
• Many agreements lacked the necessary legal standing
• It became impossible to accurately audit carrier invoicing against well structured contracts
• From a sample set - an estimated 18% of carrier invoices were invoiced accurately and in complete compliance with existing contracts
• Client was subject to overcharges, duplicate billing, and erroneous billing
• Client had no method to capture logistics data and report to produce true Supply Chain Costs

The Solution

Eight to ten week project, moving to monthly compliance monitoring. Folio coordinate's the process and deliverables, allowing client to focus on their core competency.

Trendset de Mexico and Folio Logistics partnered to assist in supply chain professionals employing best practices in the Latin American logistics industry. Following a well defined process and a strict implementation schedule, Trendset de Mexico and Folio Logistics began the process of aligning carriers, contracts, transportation lanes and overall Supply Chain strategy. Industry professionals from Mexico City and the United States met in Mexico City and at Mexico's largest port in Veracruz. Intense supply chain data gathering and contract review sessions were initiated.

Key Deliverables

Contract Analysis

• Aggregate contracts
• Detailed analysis of contracts
• Identification of contract gaps, review of terms and conditions

Shipping Analysis

• Aggregate shipping data
• Comprehensive analysis of shipping patterns
• Create accurate portrayal of current shipping patterns

Carrier Request for Pricing (RFP) Parameters

• Identify key stakeholders – secure contact information
• Document stakeholder needs and negotiation expectations
• Identify current carrier base, carrier issues and document expectations

Bid Management

• Preparation of bid package for carriers
• Creation of standardized contract agreement
• Establishment of rate and accessorial templates
• Establish Terms and Conditions specifics
• Carrier qualification review
• Identify and contact carrier RFP participants
• Submission of bid package to carrier base

Carrier Negotiation

• Collection and Analysis of bid responses
• Review of bid submissions for requirement compliance
• Analysis of RFP terms and condition responses
• Quantification of possible transportation savings

Carrier Selection

• Analysis of bid rate responses
• Rate and Ranking of carrier bid submissions
• Carrier selection and lane awards
• Routing guide creation and distribution
• Contract Implementation
• Contract execution and implementation
• Initiate compliance monitoring

Systemic Monitoring

• Regular collection and consolidation of freight invoices from client
• Detailed shipment pattern reporting provided to stake holders
• Conduct periodic reviews of carrier base and shipping patterns to determine if changing conditions warrant process or contract changes
• Compliance monitoring:
  • Validate carrier utilization vs. bid established routing guides
  • Provide detailed reporting on carrier compliance violations
  • Help identify violation root causes
  • Assist in improving compliance by providing specific feedback to end users
  • Provide cost impact samples of non-compliance to demonstrate financial impact

Benefits of a Well Implemented Carrier Management Program

• Clear and established contract terms, conditions and rates
• Standardized and favorable transportation contracts
• Smaller and more effective carrier base
• Reduced and predictable freight rates
• Clear picture of current shipping patterns
• Internal tools for carrier selection
• Better forecasting of future freight spend
• Reduces fraud and non-contracted movements
• Tracks violations to determine offenders and identify improvements or decreases in performance
• Assists in identifying organizational best-practices for replication
• Provides ongoing shipment data to allow for better decision making
• Ensures freight rate savings are achieved by:
  • Providing Routing Guides to direct carrier selection
  • Monitoring carrier usage to ensure the awarded carrier is used
  • Reporting on internal or external violators who are sending shipments through non-approved carriers