For nearly all of its 94-year history, plumbing fixture manufacturer TOTO Global Group relied on steady, organic growth and sound management to build a supply chain that reliably supported $5.1 billion in annual sales and the movement of more than 60 million plumbing fixtures worldwide.
The onset of the global recession in 2008, however, drove TOTO Global Group to begin considering logistics operations improvements.
"A crisis mode prevailed at the time," recalls Sean Pope, senior manager for transportation logistics at TOTO USA, the North American division of the Kitakyushu, Japan-based firm. "Market pressures included capacity constraints, new carrier safety regulations, and fuel costs, which rose dramatically just as the economy was slowing down.
"With these factors in mind, we wanted to concentrate our energies, particularly when we put out bids for transportation and logistics services," he adds.
TOTO USA had never issued a traditional annual logistics network bid before, but by 2010, the company realized it had an opportunity to cut transport costs.
"Our goal was to contain costs while maintaining great service," Pope says. "However, we weren't sure how actively we should pursue transportation bids for 2011. We didn't usually put the entire network out to bid every 12 months; we'd typically focus on small subsets of the business throughout the year.
"There was also great uncertainty about supply and demand," he continues. "After considering all the factors, we decided the best way to make sure we were on solid ground was to do some benchmarking of our transport costs."