June 2004 | Case Studies | Reader Profile

Daniel Pigott: A Chemical Equation That Produces Profits

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With the new Hours of Service rules in effect, truck capacity is at the top of everyone's mind, says Daniel Pigott, director of NAFTA distribution for BASF Corp., BASF Canada, and BASF Mexicana in Orange, Conn.

One of Pigott's major accomplishments during his years in logistics has been developing a command center to help the chemical company make more profitable use of its truckload carriers' capacity. Now, BASF is rolling out a similar operation to boost efficiency in bulk transportation.

Pigott moved into logistics at BASF in 1994 after spending eight years in materials management and sales management with the firm. Today, he is responsible for all inbound and outbound transportation and distribution for BASF in the three NAFTA nations.

With hazardous and non-hazardous goods moving via "every mode of transportation you could possibly think of" among suppliers, factories, contract manufacturers, warehouses, and customers, he oversees a highly complex network. That very complexity offers many opportunities to boost efficiency.

In 1998, BASF contracted with a third party, Logistics Management Solutions (LMS), to operate a central dispatching center and optimize outbound over-the road shipments across the company.

As orders in the company's enterprise resource planning (ERP) system drop into an expected shipments queue, "they try to optimize and convert LTL shipments to truckload," Pigott says. This creates backhauls and continuous moves, making these transactions more profitable for the carriers.

Because truckload rates are lower than LTL, the strategy saves BASF money, and allows the company to make more efficient use of truckers' available hours.

"We can take a driver on Monday, bring him home on Friday, and do it every single time, working with five to 10 carriers across a geographical area," Pigott says.

LMS uses a proprietary transportation management system to optimize the shipments.

By helping contract carriers earn more, BASF has built up a reservoir of goodwill that puts it in a strong position to negotiate for drivers' valuable time. "We can go back to the carriers and say, 'We've given you steady business between 1998 and 2004," Pigott explains. "It's almost like a virtual private network. So now we're insulated from the Hours of Service debacle."

This year, BASF is applying the same principle to bulk shipments. Working with third-party logistics provider Omni Logistics, this January the company launched a bulk command center, which has been building continuous moves for eight BASF sites under a pilot implementation.

"We've worked for more than a year to create something called 'load over matrix.' It's the first of its kind in the chemical industry," Pigott says. Load over matrix is a method for determining which chemicals the company can safely load into a bulk trailer that has just unloaded a different chemical, allowing BASF to build continuous moves that involve multiple materials. Where chemicals are incompatible, BASF may take advantage of a carrier's drop yard, allowing a driver to unhook one trailer and pick up a new one.

"A lot of people think the truck and trailer are attached," Pigott says. "We don't. We look way outside that box. The hell with the box—we throw the box away."

The key is to apply creative thinking to create value all around. "If we can clean or change a trailer out, then we can make some money for BASF and for the carrier," Pigott says. "Everyone has to win, or we won't do it."

The Big Questions

What are you reading?

The Five People You Meet in Heaven by Mitch Albom

What's in your briefcase?

My computer and planner. My phone is on my belt.

Advice to people starting out in logistics?

Find a number of mentors: one in the area in which you want to work in the first five years of your career, and one in the area where you want to be 10 years from now. Get a sales and marketing mentor and one in accounting, because you will need those skills in logistics. Then become APICS certified within the first year. If you do, you can write your ticket in logistics.

Business motto?

Be kind to people. People are the keys to success.

What do you do when you're not at work?

When I travel, I run three miles a day. When I go home, I restore my father's 1963 Chrysler Newport two-door hardtop. It has been an eight-year project and I'm almost done.

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