Caribbean Export Control and MRO Logistics for Mining and Refining Operation

Project overview

Customer:

Sizeable primary metal mining and refining operation that converts raw material into refined alumina powder for use in world markets

Location:

Caribbean

Challenge:

The customer’s unique production complexity, remote location and lack of developed local sources of supply required a robust international sourcing capability and an enhancement of procurement processes and systems to reduce long lead times.

Solution:

We designed and created customized processes and deployed proprietary operating systems, leading to the implementation of a comprehensive solution that included a dedicated support team of procurement, supply chain and logistics professionals located in the U.S.

Key results:

Ferguson Industrial implemented efficient supplier and export logistics management through:

• Export compliance and documentation: Efficient export documentation and customs requirements for reduced shipping time

• Shipping and logistics: Streamlined receiving, identification, staging and container loading

• Material aggregation and containerization: Shipping to one point of aggregation and streamlining process for international shipping

• Strategic sourcing: Providing strategic sourcing expertise that identifies, evaluates and selects suppliers for the most cost-effective and efficient strategies to lower the total cost of ownership

• Tactical procurement: Proactively manage all aspects of tactical procurement with a focus on having the right material, the right price, at the right time

• Consolidated supplier accounts payable: Eliminates the need for cross-border payments; provides sub-tier supplier management and supply chain financing while limiting the exposure of foreign currency exchange rates

Ferguson advantages:

• Access to 30,000+ reliable and industry-leading suppliers

• Elimination of an international company attempting to establish credit positions with key U.S.-based suppliers for $18M+ in annual purchases

• Direct customer link to a dedicated team of experienced and knowledgeable purchasing, inventory management and logistics professionals

• Cost-competitive sourcing and supply chain utilization by leveraging our market-leading position within the industrial distribution marketplace

• Ability to procure at U.S. price points vs. in-country or export price points typically sold at a premium

• Export documentation and compliance control processes and standards

• Container loading, distribution expertise, port transfer and drayage services, shipping schedule conformance and shortened lead-time turnaround

Background and scope

Our customer is a sizeable primary metal mining and refining operation located in the Caribbean that converts bauxite into refined alumina powder for use in world markets. The operation involves mining unrefined material and, via conveyor and rail systems, transferring it to the plant.

From there, the refining process begins and eventually creates finished products that can be used in the aluminum manufacturing industry. Via conveyors and loading equipment, finished products are finally transferred onto ocean vessels for international customers.

In providing support and expertise for an offshore mining and refining facility, the customer faced several challenges: the geographical location, complexity of operations and reliance on third parties to manage the shipping and delivery of goods to the location.

To mitigate these factors while addressing a wide range of requirements and considerations, we needed to provide a comprehensive approach:

• Access to extensive supplier base

• Supply chain management

• Total cost of ownership savings

• Export compliance

• Logistics

• Overall cycle time reduction

• Improved quality of service

Service model

Challenge:

The customer built their Caribbean location over many decades using numerous suppliers, equipment and technologies. However, most suppliers and OEM providers had difficulty servicing a remote facility outside of their home market.

Indirect material and consumable facility needs were difficult to source, export, ship and arrive in time for the customer’s demanding production schedule. In addition, most large U.S.-based OEM and supply partners did not have the expertise or system tools in place for optimal support.

Solution:

We worked closely with the customer to develop a cost-effective purchasing and cross-docking operation to support the offshore facility. This included a dedicated warehouse and office complete with personnel, material-handling equipment, warehousing/storage, product identification and end-user part number identification, along with other essential resources to ensure a successful outcome for each shipment.

Export compliance

Challenge:

Managing a large-scale export operation requires considering many factors: regulations; proper classification of goods; licensure and permitting; debarred and validated parties; and foundational requirements like documentation, commercial invoices, packing lists and other relevant shipping procedures.

Prior to our arrival and implementation, there was little consistency and expertise in these matters. It was largely left to an array of suppliers with experience and expertise in some, but not all, of these areas. Consequently, shipments would often be delayed due to incorrect classifications, missing information and a lack of understanding in exporting material on a larger scale.

Solution:

We worked directly with internal and external sources to establish an efficient and repeatable process for export compliance. Collaborating with the customer, we set up technology and human resources to put a truly comprehensive program into place. Our team created and implemented a proven methodology and process component for all aspects of item classification and document completion.

Logistics

Challenge:

Given the nature of an underdeveloped source of supply in-country and the reliance on those based in the U.S., there was a key need for timely and dependable product availability and access to reliable delivery via carriers and freight forwarders serving this account.

One obstacle we had to overcome was the lack of a dedicated handler at the customer’s host site. Other challenges included mandated prepayment, a lack of expedited services into the country, extended lead times and shipping variability, along with staffing concerns exhibited by the current providers.

Solution:

Ferguson Industrial challenged the current state by introducing a trusted and proven partner whose expertise and consistent performance record allowed for many improvements. The customer was able to realize a significant cost reduction in container- and freight-forwarding services by using our preferred relationship. As the nation’s largest provider of PVF products, we were able to leverage our sophisticated supply chain and network of providers to the benefit of our customer.

We also provided a solution for expedited delivery outside of the regular shipment schedule, an option that did not exist before our program. Additionally, many export-services providers require prepayment as a condition of doing business but, as our customer’s proven and capable partner, we were able to significantly improve terms and conditions based on their size, strength and position in the market.

Supply chain management

Challenge:

Several factors determine the efficacy of a comprehensive supply chain management program. For this program, the customer had a vested interest in lowering costs, developing reliable sources of supply, reducing their risk within the supply chain and improving production.

The expected outcome was to create a competitive advantage in the marketplace. We needed a progressive, flexible and forward-thinking service provider to join together these disparate and isolated functions.

Solution:

Using our proprietary system tools and time-tested processes, we created an efficient requisition, order fulfillment and delivery system that reduced lead times, improved efficiencies and mitigated risk for the customer.

In addition, we continually drive improvement by providing valuable insights through in-depth reporting on trends in consumption, usage and cost savings. The cornerstone of our program is working effectively to improve the overall experience—we become an extension of the customer to support their core mission and align our organizations to achieve their goals.

Additional results

• 22.6% reduction in total cost of ownership

• 24.6% PPV cost savings against current market pricing via efficient sourcing

• 24.5% reduction in container expense

• 8.2% reduction in custom crating and packaging costs

• Significant cost savings associated with a third-party logistics provider

• Product file integrity and compliance

• Inventory cleansed, cataloged and cycle-counted to comply with generally accepted accounting principles (GAAP)

• Robust reporting and KPI program with standard customer dashboards and access to multiple reports for spend, budget controls by cost center, usage and forecasting abilities

• Improved inventory turns by consolidating redundant part numbers (including redundant part numbers by multiple manufacturers), eliminating multiple manufacturers that had not been formally approved for the manufacturing process and improving visibility of available product to customer personnel

• Increased reliability and control of the supply chain, the right approved product and the correct unit of measure, MOQ and purchase quantity

The solution: Ferguson Industrial

We are more than a supplier—we’re a comprehensive solutions provider for industrial businesses of every size and scope. The collective and coordinated expertise of our associates proves to be a crucial resource for overcoming our customers’ challenges holistically, enhancing operational, logistical, compliance and financial situations in the short and long term.

To learn more about how Ferguson Industrial can make your business more efficient with our integrated supply solutions, visit ferguson.com/industrial.