Transforming Logistics through Backhauling

Franco Liotti, Head of Logistics Argentina at Holcim, brings over 15 years of experience in supply chain and operations within the Consumer-Packaged Goods and Construction Materials industries. He leads logistics operations across the country, overseeing a team of 160 professionals and managing a budget of USD 45 million annually. Liotti is responsible for the bagging process, transportation, and logistics performance of Holcim's plants, coordinating a fleet of 70 carriers and 400 units for raw materials and finished product distribution.

Through this article, Liotti highlights Holcim Argentina's strategic implementation of backhauling to optimize logistics efficiency, reduce costs, and lower the carbon footprint, showcasing a transformative approach to sustainable and effective transportation management.

At Holcim Argentina, the logistics to deliver products such as cement and other construction materials face the challenge of guaranteeing cost-efficient deliveries and high levels of customer service. However, our operation is distinguished by overcoming additional challenges: managing heavy loads, one customer per truckload, traveling long distances, and dispatching more than 100 trucks daily from four production plants distributed throughout the country.

With an average distance of 200 miles per trip and a maximum of 800 miles to some of our end customers, the efficiency challenge led us to ask a key question: Do we opt for fleets with lighter units to increase the drop size per trip? , or do we prioritize heavier and more versatile units that allow us to maximize efficiency through backhauling, whether transporting our raw materials or collaborating in third-party circuits?

We chose the second alternative, convinced that this strategy would generate greater efficiencies for the entire company. After months of work, we confirmed that it was the right decision.

Key elements of our strategy

Implementing this strategy involved addressing several fundamental aspects:

"Once costs were aligned, the transportation management system (TMS) route optimizer automatically prioritized backhauling opportunities. This approach allowed for daily adjustments, capitalizing savings and efficiencies early"

Clear communication with carriers about our strategy: We have a 100% outsourced fleet, so effective communication with our carriers was essential. We managed to align the renewal of units with the specific needs of our operation, guaranteeing that they were equipped with the type of vehicles required.

Partnership with Procurement: The strategy increased operational and commercial complexity. We redesign agreements, explore new suppliers, and use innovative negotiation tools. This alignment with Procurement was crucial to implementing a strategy of this magnitude.

Using the Should Cost Model: We thoroughly analyze the technical aspects of transportation costs to better understand the costs associated with backhauling and align expectations on tradable efficiencies.

Daily management control with TMS: Once costs were aligned, the transportation management system (TMS) route optimizer automatically prioritized backhauling opportunities. This approach allowed for daily adjustments, capitalizing savings and efficiencies early.

Impacts achieved

Implementing this strategy has not only improved cost efficiency but has also reduced the carbon footprint of additional trips by 25 percent to 30 percent. This generated a positive impact on our long-term emissions reduction roadmap.

Today, when analyzing the impact, we can see that we have radically transformed the way we transport our products and raw materials. This evolution has allowed us to optimize costs at the corporate level while maintaining On Time Delivery to clients at historical records.

Looking at the future

Our next steps are clear: deepen and make backhauling more complex. This includes incorporating larger units and integrating closed circuits that involve three or four delivery and collection points. It is no longer just about return trips between two points, but rather a more robust and sophisticated model that maximizes each kilometer traveled.

Backhauling is not just a strategy; it represents a fundamental shift towards more efficient and sustainable logistics practices, reflecting the industry's commitment to innovation and responsibility in supply chain management.