Amway cuts costs with transportation procurement tool

container ship at sunset

Amway, the world’s leading direct-selling business specializing in health and beauty products, manages a sprawling supply chain within 100 markets and territories with manufacturing facilities that incorporate ingredients from Amway’s farms around the world. In the case of an Amway multivitamin, for example, the company controls the process “from seed to supplement,” transporting raw materials to manufacturing sites in the U.S., China, India and Vietnam, and then shipping finished products on to distributors and consumers, utilizing a network of hundreds of distribution centers around the world.

The challenge

For many years, Amway had used a generic sourcing tool that only facilitated communications with the company’s carriers rather than providing access to a supplier database and a collaborative environment to conduct sourcing events. Even with the e-procurement tool, Amway’s Global Trade Operations group still relied on Excel to consolidate and analyze the data, a time-consuming process requiring hundreds of hours of data manipulation and cleansing.

The company began searching for a better way to procure freight and manage bids. After selecting the Ticontract multi-modal freight spend management platform by Transporeon Group for its ability to standardize the sourcing and analysis processes, Amway launched its ocean freight RFQ, which resulted in full control over negotiations while delivering results in record time.

Substantial reduction in transportation costs with transportation procurement-focused tool

Amway had several key reasons for switching to a procurement tool tailor-made for transportation and logistics. Previously, bid management was extremely time-consuming for the Global Trade Operations group. The team would post rate matrices, but carriers would then manipulate both the file structure and the data. Amway’s analysts would have to try and merge this information into an “apples-to-apples” comparison, which required hundreds of hours of data manipulation and cleansing. A typical RFQ was a four-month process, after which additional time was spent establishing contracts and entering new rates into the system, all while dealing with extensive email and telephone communication from carriers.

The company launched its first RFQ with Ticontract at a point when the ocean freight industry was in some turmoil with a record number of mergers, acquisitions and new alliances, impacting service in key lanes and reducing carrier capacity. Brandon Clark, Manager – Global Transportation at Amway said that they expected an increase in rates due to the business climate of the industry, but certainly did not anticipate any savings.

“We were able to realize almost 8% in transportation cost savings while increasing our payment terms by an average of five days and simplifying our rate structure,” says Clark. “We also saved over 200 labor hours by implementing Ticontract.”

Faster bid process with full control over negotiation

Managing the bid process with Ticontract also saved a valuable amount of time. “We completed the first round of the RFP, analyzed the data and kicked off the second round so fast that we surprised the carriers—they are used to us delaying the process,” Clark says. “When next year’s bid comes around, we expect to only tweak our RFQ template and relaunch within a matter of hours since all of the data is available to us in the system.”

“We have been able to create an unlimited number of ‘what-if’ scenarios with the Ticontract combinatorial analysis feature,” notes Clark, which has strengthened the company’s negotiating position with carriers. “It is a good feeling to know that you have control over the negotiation process.”

Significant savings in air freight RFQ

Following the success of the ocean freight RFQ, the Global Trade Operations team also used Ticontract to conduct its first air freight bid in more than three years. The Amway team now has the knowledge and experience to create and launch Ticontract sourcing events on their own, therefore integrating transportation procurement deeper into Amway’s internal processes.

“We needed very little support,” says Clark. “We did about 99% of the work ourselves to launch the bid event, and it enabled us to be strategic instead of transactional throughout.”

Faster and more efficient processes enabled an early launch of the air bid, beating Q4 peak season price increases. This, combined with new powerful analytics capabilities, reduced costs by more than 25% in some lanes.

“Now that the ocean and air bids are in place, it will require minimal effort to repeat the process again and again,” notes Clark. “We couldn’t imagine going back to the old way of conducting our RFQs. In the future, we plan to integrate truck and parcel modes in multiple regions across the globe.”

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