AVISTA OIL: Reducing costs through a digital supply chain strategy

Chemical refinery at sunset

Almost all logistics processes at AVISTA OIL are digital, resulting in several benefits for the company: Lower transportation and processing costs, greater transparency, and higher productivity. We talked to Manfred Himmelbach, Group Logistics Officer with AVISTA OIL.

AVISTA OIL is one of the leading companies in the processing of used oil in Europe and the U.S. Used oil, emulsions and used glycol are transported to three refineries from 58 collection facilities in central Europe and the United States. At the refineries, the products are refined, mixed, repackaged and then sold. To manage the complex logistics requirements, Manfred Himmelbach, Group Logistics Officer at AVISTA OIL, has implemented a completely digital process chain: from electronic RFQs via the linked freight rate management system, to automatic freight assignment and dock scheduling, all the way through to electronic audit of freight invoices. Himmelbach discusses the best-practice example in an interview.

Mr. Himmelbach, why are the logistics processes almost entirely digitalized at AVISTA OIL?

Before the conversion, we had no transparency. Every freight section issued its own calls for bids and assigned freight contracts to various carriers. It was obvious to us that the process could be organized much more efficiently and economically. As a result, we have centralized all these processes in the Group Logistics department. Results show that we were right: Greater transparency has reduced logistics costs and made processes efficient and up to date. All processes can now be viewed in one system.

Which module has brought the greatest benefits?

If we consider cost savings alone, the electronic RFQ module has been the greatest single factor. It enabled us to cut transport costs by a six-figure sum in 2015. But it is more than just the costs. Our logistics must work seamlessly. This is why it was so important for us to establish a consistent digital process to make all processes more efficient for everyone involved in the supply chain. For example, dock scheduling not only reduces the wait time for truck drivers but also improves our production planning. My colleagues at the refineries now know what is being delivered on the next day at what time and can plan their schedule accordingly.

Could you describe the complete digital process?

We place our calls for bids with the Ticontract transportation sourcing / RFP / bid management module. This gives us access to a large database and extends our pool of carriers. We use this tool to select transport service providers for the tender and assemble comprehensive tender documents. The carriers enter their quotes into a matrix, which makes it easy to evaluate the quotes with the tool. Once the contracts are awarded, the data are exported to the freight rate management tool, which has a very clear and convenient structure.

And how does the actual process of an actual freight order work?

Ticontract rate management is networked with the Transporeon platform. The requirements are input into the shipment execution module with just a few clicks and the order is forwarded to a suitable carrier based on various criteria. The carrier generally accepts the shipment and the freight documentation is sent digitally. If the carrier is delivering used oil, emulsions or used glycol, a time slot for receiving and dispatch at the applicable refinery can also be booked.

What are the advantages of this?

Transparency is much greater with automated shipment execution. The entire process is centrally managed, but the various departments can view the information on their loads at any time. Manual processing has also been greatly reduced. The system manages 80% of the load tendering without requiring additional telephone calls or emails. The dock scheduling system has reduced throughput times at our refineries, resulting in shorter wait times for trucks and more efficient use of loading capacities.

Is there still a follow-up process after delivery or pick-up?

Yes, the circle is closed with the invoice audit. This has enabled us to reduce the manual delivery notes by 90%. The billing is done in four hours a week, because the system automatically reconciles the transport order and the contract stored in the rate management, and creates a credit entry based on the reconciliation. This enables us to have everything in one system from the tender to the credit note process.

What else is included in the AVISTA OIL digital supply chain?

For 2017, we are planning an interface between our ERP system and the Transporeon platform. Our objective is to create freight orders directly in the ERP and then assign them over the platform.

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