Zhenghe Group has managed to cut transportation costs and increase profits by more than 13 million yuan ($2.14 million) by optimizing logistics management of raw materials.
In the past, the company would lose raw oil while unloading goods at port, transporting between port and plant, and unloading at the plant. Data showed that oil lost at ports made up more than 90 percent of total losses. The losses were mainly caused by lack of coordination and nonstandard oil elevation measurements. The company began to address the problems by dealing with various relations at port and extending the time for oil elevation measurements. As a result, it managed to reduce oil losses.
Although losses at the other two steps contributed to only 10 percent of the total, Zhenghe also took active measures to address them. The longer the transport time, the more the oil temperature will drop. This results in more oil sticking to the tank wall. To combat the problem, the company equipped each vehicle with a GPS system to monitor transportation time. It also assigned personnel to guide traffic in order to cut waiting time before unloading. The efforts have yielded positive results.
The improved logistics management has helped bring down operation costs by saving approximately 2,220 tons of raw oil per year.