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Purch-lympics Entry #5 - Round #2
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Bizerka Oreskovic
Purchasing Director, Croatia
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"The old supplier "A" of strategic raw material was located not far away from the plant. The strategic raw material was purchased on terms: ex-Works (Incoterms 2000), and for the transportation, the silo trucks were bought to minimize the transport costs and to secure the process, as trucks were the only possibility for unloading (silo or big-bags).
As the company has been carefully monitoring its surroundings and the competition it was obvious that the raw material which was located close to the production was not of sufficient quality level any more. The old supplier was not ready to invest into the production to reach the quality level. The Research and development department created very soon new formulation with the strategic raw material which was located approx. 1800 km away. The calculation was made: silo-trucks were out of question, the only possibility were trucks loaded with big-bags. The new supplier was ready to load the trucks with big bags, as well as over sea vessel. For us sea vessel was possibility, but the Port was located 600 km and again the expensive and demanding multimodal variant. The first trucks were loaded, while the transportation was expensive, it was nightmare to find sufficient number of trucks.
Although the supplier has not used river transportation by vessel we suggested and found Capitan of the vessel who was ready to take the challenge. In the town was the river port which was, lately, used very seldom.
The calculations were made, the opportunities created, and fast and flexible decision were made. The first vessel was loaded and has safely reached the destination and since than continuously delivers the strategic raw material.
The result was cutting the transportation costs; secure the sufficient quantity of strategic raw material which was additional factor to the firm profitability, contribution to county development and contribution to environmental protection. This also shows that knowledge, if efficiently managed and locked into processes enhances value."
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