16th Annual NASSTRAC Shipper of the Year: Morton Salt Goes With the flow

It’s an iconic staple that may be in more American kitchens than any other food product.

However, for 167-year-old Morton Salt, its transportation bidding process had been stuck in neutral after years of operating a regional strategy that failed to bring modern efficiencies to its complicated supply chain.

The problems began surfacing a decade ago. At the time, its splintered approach to dealing with carriers left all of its transportation stakeholders operating in silos. According to the logistics team, Morton couldn’t coordinate its carriers well due to the fact that it had no single methodology for bidding for business from its hundreds of truckload partners.

So, in 2014, the Chicago-based company engaged in its first-ever national truckload (TL) request for proposal (RFP) in an attempt to open up its entire transportation network. The framework for modernizing its supply chain began with its bidding process - and the results of this modernization have been spectacular in less than two years.

The solution began with a thorough internal look at Morton’s ground transportation needs. After much internal brainstorming, Morton decided to totally revamp the way it contracts out its nearly 100,000 truckload shipments a year. The results have been improvements in all three of its major business segments - consumer, industrial, and bulk de-icing.

For the successful revamping of its truckload bid processes, Morton Salt has been named the 2015 NASSTRAC Shipper of the Year, an award given annually by the association and Logistics Management to a shipper that has transformed operations through the implementation of best practices and innovative thinking. This year’s award is going to Morton’s transportation and logistics team that includes Todd Bulmash, logistics analyst; Wendy Wadas, senior director of customer service and logistics; Jennifer Witt-Zielke, logistics manager; and David Patterson, senior manager of supply chain business process excellence.

“This was something we were trying to solve by the end of 2014,” explains Bulmash. “We wanted to provide a solution to the organization that encompassed the entire network. We had done smaller regional bids in the past, but we wanted to bring the entire Morton Salt network into the fold.”

Betsey Nohe, Morton’s vice president of supply chain, was executive sponsor for the change project. She says that the goal was a complete modernization of Morton’s transportation bidding processes. “Our North American carrier bid is part of a comprehensive strategy to design and implement an effective and efficient logistics network at Morton Salt,” she adds. “I’m proud of the approach that Todd and his team took with this project.”

Understanding the reality
Before changing its bid processes in 2014, Morton Salt was utilizing several hundred carriers. These included truckload and van, bulk, flatbed, and some intermodal to and from its 80 shipping locations covering more than 4,700 lanes.

At that time, Morton used some of the largest TL carriers in the country as well as hundreds of niche carriers specializing in remote locales. Morton Salt was a huge shipper in the U.S. and Canada, with more than 100,000 shipments a year. But strangely, Morton officials candidly admit, it wasn’t seeing the economies of scale that large shippers typically enjoy.

This was perplexing because Morton offers the type of freight that most TL carriers covet - highly palletized, easy-to-load, “driver friendly” freight. Despite its size and favorable type of freight, discounts were limited, and “triangular” moves between different carriers were nearly impossible because most carriers operated in a vacuum. In turn, brokers were utilized far too often. When capacity tightened following the Great Recession in 2010, Morton found its old ways were not sustainable.

“Our mission was to develop a balanced carrier network through comprehensive strategic alignments,” says logistics manager Witt-Zielke. “We wanted to become a ‘shipper of choice.’”

Today, “shippers of choice” tend to be those large national accounts that truckers treasure. They tend to get preference when capacity gets tight, and they also enjoy some of the best discounts in the industry. But because of its previously scattershot approach, the company never really gained that status because few carriers knew the entire scope of Morton Salt’s operation.

“Through the years, we developed relationships with a lot of brokers, and that was working for a while at a competitive cost,” says Witt-Zielke. “But when the market shifted and tightened following the recession, it was getting more difficult for brokers to cover our network and get equipment where we needed it to be.”

What Morton Salt needed was a more tailored solution to its transportation problems. It needed carriers to be able to react to its special needs, whether that was increasing “drop-and-hook” trailers at certain locations or assuring that capacity was available in remote locales. “We were trying to leverage our total transportation requirements,” says Witt-Zielke.

What Morton found was that even its incumbent carriers didn’t realize the scope of Morton’s operation, even though it shipped a fairly significant volume. “Once you set the entire gamut of our operation, the full picture becomes apparent,” Witt-Zielke says. We were trying to tie it all together by finding carriers with lane synergies.”

Standardization was a huge goal that the Morton Salt logistics team knew it had to achieve. It wanted one standardized contract for its motor carriers with all accessorials and fuel surcharges working off the same boiler plate - and it wanted one standardized tariff off which discounts would be based. “We wanted to hit the reset button and get everybody working on the same platform,” says Witt-Zielke says.

Overcoming the challenges
Getting hundreds of carriers involved - both those incumbent carriers familiar with Morton’s operation and potentially new ones - is not an easy chore.

“We initiated the process in May of 2014, and it took us a good six months from start to finish,” says Patterson, the team’s senior manager of supply chain business process excellence. “We engaged a third party to help us with the RFP because we knew we couldn’t do it by ourselves.”

During the RFP period, the company was able to have a business review with several of its key carriers as well as carriers that were new to the company. The business review opened dialogue about expectations from both sides, and right off the bat the team realized that it was lacking the ability to benchmark its base rates due to the fragmented nature of its transport operations. “Our strategy and the market place were evolving,” Patterson says. “We needed to evolve with it.”

Finally, an engagement letter went out to 271 mostly TL carriers, including 126 that Morton Salt had been using in the past. Then the logistics team initiated a conference call with all of them to explain its new vision and how they would be involved in the processes.

“We walked the carriers through the bidding process to make sure we got synergies on how the bids were arranged,” Bulmash recalls. “We wanted a holistic approach.”

Morton Salt gave the carriers two weeks to execute their bids. According to Bulmash, the carriers were surprised by how much business was available. “Some carriers operating only on the consumer side of Morton’s business, for example, were now allowed to bid on business from its industrial side,” he says. “It allowed them to pick up additional business.”

In short, the team says that the competitive results were “spectacular.” Patterson says that he remembers getting inquiries from carriers they hadn’t heard from in a long time, and overall reaction was nothing less than ecstatic. Its freight, highly palletized, is ideal to load and usually weighs out on a truck before “cubing” out. “Carriers really like to haul our freight,” Patterson says. “We had to turn carriers down because we had too many carriers as it was.”

Of course, there was some massaging that had to happen. Incumbent carriers had to be assured that they weren’t being eliminated from Morton’s plans, while newcomers had to be instructed on what the new rules of engagement would be.

“We were truly looking for partners, and we really took a different approach,” says Witt-Zielke. “We didn’t want to disrupt service levels, and we have had a lot of these relationships for a very long time. So, the last thing we wanted was to get rid of partners unless there were service issues.”

The result: Morton tried to maintain incumbent carriers where it made sense. “By bringing in new asset carriers to tie together lane synergies, some of our incumbents did lose some volume,” says Witt-Zielke. “Overall, I think we maintained most of our relationships, but have made vast improvements with getting loads delivered on-time to our customers.”

“Overall, we were happy with our current network, but there were some areas where we needed to become stronger from a service level,” adds Patterson. “Carriers are picking and choosing who they want to do business with and where they do it, so we’re still striving to become a better partner with our carriers.”

Implementation
During this process, the company was also undertaking a network optimization, a move that caused some issues due to the fact that the amount of freight on certain lanes was suddenly in flux. In turn, carriers were unsure of the exact amount of freight that was included in each RFP.

To overcome this challenge, the team undertook a painstaking analysis of its exact freight needs to make sure it gave an accurate representation of its volume requirements. The result was a thorough review that helped both internal planning and external assistance to its carriers.

In some cases, lanes were offered point-to-point. In others, the lanes were point-to-state or point to three-digit postal code. This flexibility in offerings helped align the carrier’s expectations to those of the company. Second, after the carrier’s proposals were submitted, Morton went through another intensive round of analysis. 

From there, the team made a conscious decision not to go with the lowest price. According to Bulmash, while the company was always conscientious of cost, the goal of the analysis was to ensure total coverage. Therefore, the analysis was performed to weed out what Morton officials call “paper rates” - those eye-popping discounted rates that may or may not actually be available on all lanes—from those that would provide a sustainable solution. 

“We could have taken the low-cost carrier approach across the board,” says Bulmash, “but we wanted an optimal price and service mix. We took a deeper dive into our analysis, and at the end of day, we weren’t solely focused on price.”

Morton’s customer base includes grocery, mass merchandizing, and retail outlets. It also includes industrial customers in various industries such as food service, food processing, and pharmaceuticals. In addition to consumer and industrial products, it has a huge deicing salt business that provides products to clear our roads and sidewalks during the winter season.

“We service major retailers as well as customers with small retail shops that want to place an order by phone,” says Patterson, who adds that’s why team is now constantly analyzing its carriers and rates. When it sees an anomaly, it calls the carrier for a conference.

“Sometimes it’s not an easy conversation to have, but we want to make sure we’re speaking the same language,” says Bulmash. “We want to have the carriers provide a rate that’s going to work well for both companies.”

How’s it working?
After nearly a year, Morton Salt has trimmed its carrier base from 271 to 150 carriers in its network. The logistics team is also aiming to get its on-time delivery percentage in the mid-90 percent range.

And now that it’s moved under the new contracts, the company has also seen a dramatic decrease in the number of shipments that were not covered or had to be released to the spot market. Morton officials say that one sector saw a 71 percent decrease in the number of spot market shipments - a major savings considering spot market rates tend to be higher than contract rates.

To top it off, areas of troubleshooting - where carriers are rejecting the tender offer - have been reduced from 10 percent to around 6 percent. “Instead of going to the spot market as we were doing, we’re now holding our carriers more accountable,” says Witt-Zielke.  

That accountability has resulted in the following operational improvements:

• Because metrics have been increased, score-carding of carriers and facilities are now the rule.

• Morton Salt’s network is much more balanced between freight handled by asset carriers and that handled by brokers.

• A dock-scheduling program has allowed for continuous improvement at the company’s plant locations.

• Sustainability has been markedly improved.

• Use of carriers involved in the Environmental Protection Agency’s acclaimed “SmartWay” green program has been greatly increased.

“This was just a start of continuing effort both internal and externally,” says Patterson. “And we’re not stopping here. It’s an evolutionary process.”