Koch Fertilizer, LLC Optimizes Freight Costs, Streamlines Invoicing to Support Growing Global Company
 
 

Koch Fertilizer, LLC Optimizes Freight Costs, Streamlines Invoicing to Support Growing Global Company

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Since its formation, Koch Fertilizer has grown from a single ammonia production facility and import terminal in the United States to become one of the world’s largest fertilizer producers and marketers. Together with its affiliates, Koch Fertilizer has the capability to manufacture, market, and distribute more than 13 million metric tons of fertilizer products annually. The company, which is part of Koch Industries, Inc., owns or has interests in fertilizer plants in the United States, Canada, Trinidad, and Tobago, and its distribution network includes state-of-the-art terminals in the United States, Canada, Mexico, Brazil, Australia, France, and the United Kingdom.

Over the years, Koch Fertilizer has grown through acquisition and expanded its business to include not only ammonia-based fertilizers but also potash, phosphate, sulfur, and blended products. The vendor of Koch Fertilizers’ prior enterprise resource planning system was not scaling its applications to keep up with the company’s changing needs, including international assets and the introduction of enhanced-value products, so Koch Fertilizer implemented Oracle Financials Release 12.1 and Oracle Transportation Management. Today, the company is optimizing its North American rail and global truck carrier spending by selecting carriers and routes based on rates and performance, and it has automated the receipt of freight bills. Further, with increased visibility into freight spending trends, Koch Fertilizer will be better able to make proactive changes to mitigate rising shipping costs.

 
 

 
 

Challenges

A word from Koch Fertilizer, LLC

  • “To create long term value and efficiently grow our logistics business, we had to reduce transportation costs. Oracle Transportation Management helps us ensure optimal global freight spending. It allows us to broaden our distribution channels and make informed and strategic decisions about carriers and routes.” – Bruce Bitcon, Business System Analyst, Koch Fertilizer, LLC

  • Improve integration and flow of financial data to support a growing global commodity-based enterprise
  • Decrease the cost of shipping fertilizer products by optimizing rail and truck carrier selection based on rates and performance
  • Enable rapid updates to freight rates to be more competitive in the market by ensuring timely, affordable shipments
  • Improve freight reporting with expanded key performance indicators (KPIs)

Solutions

Oracle Product and Services

  • Deployed a single global instance of Oracle Financials Release 12.1 and Oracle Transportation Management for an integrated, efficient financial and transportation management solution to support the growing company
  • Streamlined business processes to create efficiency across purchasing, sales, payables, logistics, and other systems, in multiple currencies
  • Enabled users to select rail and truck carriers and routes more strategically to reduce costs, which is especially important as freight rates continue to rise due to a decreased truck-pool capacity
  • Improved freight billing through automated invoice matching and payment rules in Oracle Transportation Management to receive invoices through electronic data interchange and match them to shipments
  • Enabled users to utilize an uninvoiced accrual report to ensure an accurate estimate of payables liability
  • Consolidated current freight rates to optimize load planning based on carrier rates and performance, previously a cumbersome process, given the company works with 200 trucking carriers in Canada, alone
  • Updated rates and fuel surcharges for 200 carriers in just a few days with only one employee working on it, compared to the legacy system, which would have taken two employees working for approximately three full weeks
  • Improved internal financial controls and reduced maintenance efforts by eliminating previous workarounds in the legacy system
  • Expected to provide visibility into historical freight costs for fertilizer product shipments by route, enabling the company to track trends and adjust accordingly
  • Set to enable calculating the total cost of shipping fertilizer products per ton, ensuring the company is mitigating its freight risk
  • Projected to benefit from the capacity to use cross-modal analysis to identify areas where switching between rail and truck might be beneficial
  • Expected to roll out new capabilities that will enable planners and schedulers to find optimal rail routes, deploy auto-tendering on the trucking side, implement online carrier bidding, and integrate smart phone applications to help small carriers manage shipment requests

Partner

Koch Fertilizer partnered with Oracle Partner Lucidity Consulting Group to conduct a gap analysis and identify key processes the implementation needed to address. The partner was instrumental throughout the implementation and integration process.