From Decentralized to Centrally Led:
SCE Helps Advanced Materials Manufacturer Materion Boost Its Margins by Transforming Logistics
A leading materials supplier sought counsel on changes that could be made to its logistics organization to reduce costs while improving service and quality.
SCE helped Materion execute a logistics transformation effort—creating a centrally led logistics organization to gain control over logistics costs, reduce complexity, boost standardization of key processes, measure success, and create the structure required to drive continuous and sustainable improvement in cost and service.
While SCE continues to work with Materion to fine-tune its center-led logistics organization, the company has achieved annual logistics cost savings of between 16 and 18 percent. More importantly, the company now manages logistics proactively to help secure additional savings and performance improvements for years to come.
Materion Corporation, a leading supplier of engineered materials to technology companies since 1931, has grown into a diversified global company with 3,000 employees and customers in more than 50 countries.
In 2011, the company undertook a rebranding initiative, unifying many individual brand names and operating models with a new identity and approach to the marketplace. Company management quickly realized the logistics organization was not running at maximum efficiency or effectiveness, and decided to seek external counsel on changes that could be made to improve suppliers’ performance.
“We spoke with several consulting firms about addressing the problem, and were especially intrigued by the conversations held with Supply Chain Edge,” Vice President of Global Procurement Brent Van Scoik recalled. “I realized after speaking with Supply Chain Edge that our freight payment problems were just a symptom of a larger challenge. It became clear from our discussions that Materion lacked the degree of control and process it needed in logistics, and we weren’t taking advantage of the buying power of a $1.5 billion company. Instead, we were operating like four independent business units.”
The company hired SCE to help Materion execute the logistics transformation effort. SCE’s charge: work with management and all local logistics teams to create a centrally led logistics organization that would enable Materion to gain control over its logistics costs, reduce complexity, boost standardization of key processes, measure success, and create the structure required to drive continuous and sustainable improvement in cost and service.
To accomplish its goals, SCE first had to develop a deep, accurate understanding of Materion’s current operations by collecting and analyzing a wealth of data on the company’s freight processes and spending. In addition to the significant legwork involved in data acquisition given the decentralized nature of the company—as well as data cleansing and manipulation to reconcile a wide variety of sources, formats, and quality levels—SCE worked to gain the trust and support of many internal stakeholders and logistics employees with a “grass-roots” approach.
SCE’s analysis of Materion’s logistics data revealed a wealth of opportunities, from use of data to gain a complete picture of its costs, service levels, and purchasing performance, to a wide range of location- and business unit-specific logistics practices and requirements that created complexity and increased costs.
SCE then helped Materion build an optimized pool of vendors and leverage its collective bargaining power more effectively; played a central role in Materion’s selection of a single freight bill processing and payment services provider to manage all logistics-related transactions; and put its deep experience with supply chain management technology vendors to work, leading the selection of new technology applications to support the emerging headquarters logistics function.
The new processes and technologies SCE has implemented represent a tremendous amount of change in a short period of time. Thus, SCE also helped Materion train hundreds of employees on its new logistics systems and processes, with an emphasis on consensus, communication, and training to help Materion make the cultural shift necessary to fully benefit from its new logistics capabilities.
While SCE continues to work with Materion to fine-tune its center-led logistics organization, the company already has made great strides. For instance, the process, technology and vendor changes SCE implemented have helped Materion achieve annual logistics cost savings of between 16 percent and 18 percent. Just as important, with SCE’s help, Materion understands the strategic impact of logistics and, in particular, how it affects profitability and customer service. The company now manages this important area of the business proactively, controlling spending on a unified basis while making important decisions based on data, not local preferences or legacy practices. This, in turn, will help secure additional savings and performance improvements for years to come.