Creating agrochemicals for the benefit of the world’s food chain is not just a matter of producing complex substances. It demands an intricate knowledge of the Earth’s climate and what will affect next season’s crops. What’s more, it’s about getting those products in a timely manner to the farmer in the field, wherever he may be, and at the time he needs them.
Dow AgroSciences, a wholly owned subsidiary of The Dow Chemical Company, is headquartered in Indianapolis, USA, with its European headquarters in Valbonne, France. The company provides pest management solutions for crop protection and biotechnology products.
Dow AgroSciences is a multi-national business and one of the six biggest agrochemical businesses in the world. The products are, essentially, used by farmers but the supply chain feeds goods directly to both wholesalers and dealers. There are three parts to the business – agrochemical activity, professional pest management and plant genetics and biotechnology – but most of the company’s turnover, over 3 billion last year, is on the agrochemical side of the business.
Investment in research
The company’s product portfolio starts life as active ingredients, which are then formulated at a number of facilities across the world. It might take ten years to find and cultivate a molecule that has potential to be part of a pesticide. Therefore, like the pharmaceutical industry, significant investment is made into research and development.
The way Dow AgroSciences distributes its agrochemical products is no different from most of its competitors.
The organisation does not have bases in every market and therefore all goods are delivered from its main facilities, requiring an extremely efficient distribution system due to the relatively disproportionate focus on it.
Olivier Brunet, the company’s French-based global business distribution leader, takes up the story: ‘In Europe, we have four production sites and several contract manufacturing locations. With delivery from these sites to numerous contracted warehouses and also directly to the customer, there is a very complex flow of goods which involves almost 2,000 delivery addresses.
The challenge of Dow AgroSciences’ logistics operations in Europe is met by contract logistics services company, Geodis. This relationship goes back over a decade, as Geodis BM’s sales director Emmanuel Bonnet, who is also Dow AgroSciences’ key account manager, explains: ‘Everything started in 1992 and all work was initially undertaken without any contractual obligations between the two organisations, making the relationship quite informal at the outset.
Ground breaking logistics
‘Then Dow AgroSciences built a new facility at Drusenheim, twenty kilometres from Strasbourg and decided to externalise its logistics. Before the factory existed, Geodis developed a groundbreaking logistics solution for Dow, helped by the very positive relationship that had developed between the two organisations.
‘Work started at Drusenheim in ‘94 and Geodis ran the logistics under this arrangement until ‘99, also taking on responsibility for customs and despatching, as well as container work at the facility.
‘In ‘99, the agreement spread and a Geodis team was put in at Dow AgroSciences Kings Lynn facility in the UK, running logistics and transportation operations there.
‘At the end of ‘99, the contract between the two companies was extended for another three years, during which time Geodis put a team into Dow AgroSciences’ Lauterbourg, Alsace facility, as well as at Mozzanica, near Milan. In September 2002, an export centre was developed for Dow Agrosciences at its headquarters in Valbonne and, finally, in October of the same year a third contract was signed.
Bonnet outlines the geographic and commercial split: ‘Most of the business is in Europe, but we also deliver to Asia, Africa and the rest of the world, using sea, road and air. The majority of the business emanates from France, but also from England and Italy. Within the relationship, 75 per cent of the work we do is specifically transport, with the remaining 25 per cent being logistics – and this element of the deal is growing.
‘It’s a question of quantity and urgency when it comes to deciding about whether one uses road, sea, air, or rail. We make a joint decision.’
The logistics service provider’s role can be seen close up at the King’s Lynn facility, as Geodis UK’s Gary Roche explains; ‘We have a team of people at King’s Lynn, including three that do all shipping documentation and a further three who run warehouse activities. We also provide a service on site as Dow AgroSciences’ shipping department, making consignments ready for carriage. The majority of the product is hazardous cargo and we prepare all the relevant documentation here; indeed, everyone is trained in terms of documentation completion.
‘Full container load shipping is done from Dow AgroSciences and we are involved in handling all LCL cargo sea freight, road shipments and airfreight. Our role in the UK continues to expand and some of the responsibilities that Dow Agrosciences previously looked after with regard to hazardous goods, have recently been transferred to us.’
Brunet puts a global perspective on the contract: ‘Geodis’ role deals with primary manufacturing and distribution at Dow AgroSciences- on a global basis. It undertakes three main activities for us – on site logistics, management of transport activities and audit improvement to increase our productivity. We ask them to ‘do’ but more than that, we ask them to ‘improve’ and ‘develop’ with us.’
Indeed, the company’s performance for Dow AgroSciences is carefully monitored and set targets are measured as a cost per litre – in 2002, Geodis beat the overall level by in excess of three per cent. However, the relationship is not built purely on performance appraisal. It is also a question of depth and approach.
‘The relationship is based very much on attitude – specifically trust and commitment, as Dow AgroSciences was one of the first companies to look at outsourcing logistics within the agrochemical world. However, we also need to keep control of what we have outsourced and want to be sure of the service that we are buying. Their commitment to us is impressive but we continue to push them. We are always looking for service improvements, whilst retaining continuity,’ says Brunet.
Depth of support
Emmanuel Bonnet sees depth of support as important: ‘One of the key strengths of Geodis lies in its breadth. We have sites all across Europe and are able to offer a complete organisational package – for road, railroad, sea and air. Our services are integrated with each other and we even have our own train for railroad operations, between France and Italy.
‘There is also a very strong will to develop with Dow AgroSciences – where the team grows into new market areas or into new projects, we want to be there too.
‘Dow AgroSciences put a lot of pressure on us – they want top performance but that pressure is a positive force. It helps our local guys and brings them on. While negotiations may occasionally be tough, there is a strong resolution to grow – as well as a sense of challenge and purpose.’
‘Much of that sense of challenge comes from new areas. Geodis is currently working on a new warehousing project for Dow AgroSciences and we are constantly changing the way things are done to bring value to a project. New challenges are a permanent dynamic of the relationship.’
But the client demands more than a positive attitude. ‘We need service levels, competitiveness and safety. Geodis is competitive and service levels are good but this is a continuous improvement activity where we are always pushing for better performance. For example, we are still looking for improved service levels in some of the CIS countries that we distribute to but we know this is coming,’ admits Brunet.
Safety is paramount, as is evident from the fact that it is always the first item on the agenda at any meeting.
Geodis has a strong record on safety due to its specialisation in chemical transportation, as Roche explains: ‘The majority of goods that are shipped from the plant at King’s Lynn are hazardous. Therefore, there is a great emphasis on safety and transport issues – it’s the bottom-line.’
Bonnet is adamant, however, that the future is more important than the past: ‘We must not be complacent; we want to keep a high level of flexibility, be proactive and bring in new processes. Only recently, we have founded a new international department for eastern Europe traffic, in Strasbourg and are updating our IT systems, beginning at Drusenheim.’
Brunet agrees: ‘The future of the relationship will be based on the ability of Geodis to deliver innovative logistics solutions ahead of the competition, while maintaining its record on safety. Logistics is one of the key elements of our business, while image is also vital, be it portrayed on a drum, a vehicle or a voice on the end of a phone. We want to be market-leading on both fronts.
‘Looking at specifics, at Drusenheim and Kings Lynn, Geodis provides onsite logistics. We have a long term objective for Geodis to undertake on site logistics everywhere – this will take time but that is our joint vision,’ says Brunnet.
Bonnet concludes: ‘I believe that this is one of the more sophisticated examples of outsourcing in the industry. Partnership works both ways – we occasionally get things wrong as a team but we are human and trusting enough to put our hands up.
‘There is little rocket science involved – even when dealing with some extremely complex materials. It’s about making the most of human relationships and working as a partnership.’