$7.7 million Reduction in operating expenses
$121 million Savings from net synergies within three years
32% Reduction in spills, boosting sustainability efforts
Univar Solutions is a global chemical and ingredient distributor and a provider of value-added services. Its operations span 31 countries in North America, Western Europe, the Asia-Pacific region and Latin America to produce tailored solutions for customers in 125 different countries. These solutions are then delivered through one of the world’s most extensive industry distribution networks, which includes 600 distribution facilities; a private fleet of more than 3,500 trucks, trailers and tankers; more than 1,300 railcars; and nearly 90 million gallons of bulk storage capacity.
This extensive network was formed in March 2019 when Univar acquired Nexeo Solutions. When the two groups merged, the new organization set out to redefine distribution and become “the most valued chemical and ingredient distributor on the planet,” in the words of CEO David Jukes at the time of the acquisition.
Following the acquisition, company leaders quickly kicked off the Unite project, a company-wide transformation initiative to evaluate and optimize all aspects of the organization. The Unite project encompassed two core objectives: changing the company culture to be more data driven by leveraging a consolidated enterprise resources planning (ERP) system and industry best practices and creating shareholder value of $100 million by capitalizing on synergies across its various departments.
To support these goals, the supply chain group needed to improve the overall efficiency of each step of its operations while reducing the total costs. The team chose to leverage the ASCM Supply Chain Operations Reference (SCOR) model to help them outline the work ahead.
Within the SCOR framework, the Univar Solutions team came up with a strategy to achieve its goals:
Implement a single planning process to align executive sales and operations planning, individual and customer forecasts, and material requirements planning.
Strategically source direct and indirect procurement categories with improved supply assurance, order execution, spend management, as well as reduced costs.
Optimize the distribution network and eliminate redundancies.
Improve the efficiency of the transportation group, including the company’s own fleet as well as its partner carriers.
Implement a company-wide transformation office and change management organization to guide the implementation and adoption of all initiatives, efficiently deploy talent, offer shared services, review assets to eliminate those that are obsolete or redundant, and measure results.
With a plan in place and inspired workers ready to take on these new challenges, the supply chain team kicked off its efforts in 2019. Then the COVID-19 pandemic hit. But despite the challenges of the pandemic, the Univar Solutions team pushed forward to keep up with the aggressive project timeline.
In each strategic SCOR area, the responsible parties focused on consolidating systems, overlapping legacy goods, and service contracts to create leaner and more streamlined operations. Then, they leveraged SCOR metrics to drive insights into remaining operations and assets. For example, various SCOR level-1 and level-2 metrics offered insights into the organization’s upside and downside adaptability, value at risk, cost management, and asset management efficiency. The supply chain team also set up a vehicle replacement strategy that leveraged a new predictive data-driven maintenance program to establish baseline thresholds and ensure maximum fleet value with limited capital allocation.
The supply chain team’s success in each of these areas was only possible because most supply chain team members already were familiar with the APICS body of knowledge and other ASCM best practices. Univar Solutions employees regularly seek APICS certifications to grow in their supply chain disciplines. In addition, ASCM’s programs are a cornerstone in Univar Solutions’ supply chain education in order to show employees industry best practices that can be applied to their work.
The transformation also gave Univar Solutions an opportunity to adjust its operations to match with the latest industry best practices. “We have taken legacy supply and demand planning processes — informed by APICS in the early 2000s — and supplemented them with the latest thinking and best practices to truly elevate our organization’s abilities in order to redefine what being a chemicals distributor means,” says Ian Fontaine, supply chain strategy and transformation manager. “Now, we have had suppliers tell us that our supply chain planning practices are leaps and bounds ahead of our competitors in the marketplace.”
With this knowledge base, Univar Solutions’ supply chain team was able to plan and execute its transformation in just 14 months. The company credits the SCOR model as “a true North Star” for helping the organization develop objectives; measure results; and ultimately transform into a single, efficient entity.
Through the transformation efforts, Univar Solutions was able to achieve the following results in specific SCOR areas:
All planning and purchasing activities now are managed by a consolidated ERP system, which has given Univar Solutions additional insights to better serve its customers and improve supplier relationships. The tool already has been especially helpful amid a variety of weather- and pandemic-related supply interruptions, including winter storm Uri in February 2021.
The organization established a comprehensive and coordinated sales and operations planning cadence that has improved collaboration among teams and delivered improvements in forecast accuracy, execution efficiency and customer satisfaction key performance indicators.
Through strategic sourcing, re-negotiation, and the consolidation of goods and services contracts, the company has achieved more than $16 million in realized synergies savings.
By consolidating 14 locations, the organization saved $7.7 million in operating expenses in 2020 alone.
The new consolidated ERP system has created a single source for demand, production and transportation planning; inventory management; and order data. This has helped reduce the total cost to serve and working capital requirements, increased service reliability, maximized capital and transportation asset utilization, and created a strong foundation for future supply chain visibility efforts.
The new combined freight invoicing system improved the organization’s visibility, forecast accuracy and proactive engagement with carrier partners with high levels of invoicing errors. Since implementation, the company has reclaimed approximately $1 million in duplicate invoicing costs and now has zero holds on carriers’ credit.
The new comprehensive seven-year maintenance and capital replacement program has helped the company benchmark maintenance repair costs for all asset types and asset equipment performance data to create a comprehensive replacement list. The plan is projected to save the company 30 cents per mile per asset throughout the next five years.
The transformation office and talent strategies implemented by the human resources team supported all of these outcomes. In addition, the sale of 20 real estate properties generated more than $73 million in revenue, which was used to fund the transformation.
The increased emphasis on safety also enabled Univar Solutions to accomplish all of this while achieving its safest year on record. Its total case incident rate dropped from 0.80 to 0.57, and it reduced its spills on record by 32% from 2019 to 2020, which also boosted its sustainability.
Across the entire enterprise, Univar Solutions is on track to meet Unite’s two overarching goals. The company successfully merged and streamlined its operational efficiencies and improved all critical operational indicators. In addition, it generated $76 million in net synergies by 2020. An additional $45 million expected in 2022, putting the group well over its goal of $100 million.
Univar Solutions recieved ASCM’s 2021 Award of Excellence — Corporate Transformation. This award recognizes an organizational transformation that elevates the business as a result of a supply chain assessment leveraging ASCM global standards, products, services and resources.