2007 Paper Recycling Supplement - A Perfect Match

Any large business can find itself having difficulty keeping up with its management of logistics. In addition to forming a transportation team and employing new staff, another potential solution is to outsource transportation functions to a firm that has expertise in logistics services.

SP Newsprint Co., Atlanta, uses more than 120 truckloads per day of recovered paper at its Dublin, Ga., mill. With mills in both Dublin and Newberg, Ore., SP Newsprint is one of North America’s leading consumers of old newspapers (ONP).

Pacer Global Logistics, Dublin, Ohio, is a growing North American provider of intermodal and end-to-end supply chain logistics services. Its transportation services include full truckload transportation, rail intermodal marketing services, supply chain management, ocean freight forwarding, warehousing and distribution.

What do the two companies have in common? They are now working together closely to provide SP with an effective supply chain management system.

Ralph Simon, vice president of SP Recycling Corp., a division of SP Newsprint, notes that his initial research into SP’s transportation costs led him to consider the company’s overall supply chain. "What a supply chain does is make you think of the process from beginning to the end," says Simon.

He observes that rather than functioning as a smooth circle, SP’s logistics was a series of small chains that weren’t connecting.

To improve its supply chain, SP hired Vic Springer, a paper and logistics industry veteran, as supply chain manager. His role is to help SP connect the dots.

The way SP was doing business included having one group that handled only suppliers and what came into the mill, while another group handled shipments out of the mill, according to Springer. "We did an analysis on what our systems were, what we presently had and how well we were organized," Springer says. "After looking at all this, we realized it was going to be a major expense to upgrade the whole transportation group we had in place."

That’s when Springer suggested outsourcing opportunities.

Manufacturers outsource to a third-party logistics provider (3PL) because they see it as an alternative to devoting time, money or manpower to create a new department within the company to manage transportation. In SP’s case the company was looking for a 3PL to help with several goals: reducing costs, improving service and coordinating activities.

Turning to an outside source, like Pacer, to coordinate things such as warehousing, manufacturing and distribution can save the manufacturer the costly trial-and-error process and instead place transportation in the hands of an expert in the logistics field.

Besides having a previous relationship with Pacer, Springer was also sold on the company’s overall package. "We are still in control of our own freight and decision-making," Springer says. "Pacer is the arm that executes our plan and provides data back to us."

Through its tools, investments and technology, Pacer matches transportation assets and solutions to the client’s needs, says Tim

Pacer and SP’s relationship began with a discovery process where information was gathered to determine what SP’s network looked like at the time and what its existing processes and costs were.

Pacer interviewed SP employees, talked to suppliers and met with Simon and his staff to discuss their goals and expectations. The information gathering process took a month to complete, and from there Pacer worked jointly with SP Newsprint to develop a solution.

During the process SP encountered a few obstacles pertaining to the transfer of data between SP’s computer system and the Pacer system.

The change to Pacer’s Web-based system took Stefan Bridges, Pacer’s line manager of supply chain services, and his group six to nine months to complete. During the startup he worked on site at SP, dealing with the technical computer transactions and training employees.

"For SP, I think it was really nice for them to have someone they could reach out and contact if they had a problem or issue," Bridges says. He also says because SP had been operating in a one-on-one business mode for so long, the company was concerned the transition would hurt its customer and supplier base.

To maintain that personal touch and to help explain the changeover to its supplier base, SP asked Bridges and his group train suppliers on the program via phone or on-site visits. The SP group also calls customers on a regular basis to get their feedback on how the new system is working or to see if they have any suggestions to modify the Web site.

Now that SP and Pacer have been working together for more than a year, SP has seen many benefits, according to Springer. Largely, Pacer has helped the company improve its service to both suppliers and customers.

The relationship has helped SP to have more visibility into the supply chain and to be more proactive in its daily activities, says Springer. The company now knows exactly what it’s receiving, how much it weighs and who is bringing it. "Knowing this information makes it easier to coordinate outbound shipments from the mill," Springer says.

SP has received a lot of positive feedback from the suppliers who provide the company with recovered paper and raw materials. They can easily schedule pickups and access information regarding order entry and shipment deliveries by going to the SP link on the Pacer Web site. "Suppliers enjoy the benefit of being able to go online and schedule a pickup anytime during the day," Bridges says.

Pacer has customized SP’s Web order system to include information regarding weight, grades and commodities. "We wanted to make it so they

One of the plans Pacer and SP are working on for the future is developing the system so consumers or paper distributors can use it to check on deliveries. Before contracting with Pacer, consumers would call SP’s office for answers, but now all customer service calls are handled by Bridges and his group.

"The benefit is we now have someone they can call who deals directly with the carrier, instead of calling someone in our office who has to put them on hold or call them back," Springer says.

All transportation related questions go directly to an area of the Pacer office where SP-specific account personnel are on duty. Customers with questions pertaining to rescheduling or late shipments can reach Bridges and the rest of the group at any time.

In some ways, the partnership has been a learning experience for both parties. Pacer had never had a client in the recycling industry before SP, and partnering with the newsprint manufacturer has taught Pacer about the uniqueness of the supplier’s role in the recycling industry.

Outsourcing its logistic needs to a third party has given SP an outside perspective on the way it does business. The company is getting new feedback on the interrelation of all parts of its business.

Simon says he has come to visualize the supply chain concept more as a circle than as a chain. Since he now sees it as a loop, he more fully understands how a truck picking up a load of ONP can affect how or when a roll of newsprint goes out from the mill.

When it comes to finding a third-party logistics provider, Springer’s advice to others is to make sure the two company cultures match. He also says that both parties need to be open and honest with one another. "Just like with a marriage," Springer says, "you have to make sure you have the right partner."