About
Starting Semester: Spring 2025Assigned: No
Location: Atlanta
Arauco North America
Client Profile
ARAUCO is a global manufacturer of sustainably-produced forest product solutions for construction, industrial, and retail markets. With over 120 facilities worldwide, we manufacture and distribute the industry’s most-comprehensive selection of wood composite panels, premium plywood, millwork, lumber, and FSC-certified wood pulp. From its mills in South America, ARAUCO ships over 18,000 containers to the United States and Canada annually through 21 ports of entry (including 11 inland ramps) and uses a network of third party run port warehouse operations located in strategic ports around the United States to serve its customers. Arauco’s corporate headquarters is located in Santiago, Chile, and Arauco North America’s headquarters is located in Atlanta, Georgia.Project Description
Problem/Need:Due to variability in ocean services for container shipments from South America and port terminal operations in North America plus the different service capabilities of our 3PL drayage & warehouse partners, Arauco North America’s ability to consistently provide inbound logistics services that exceed customer expectations in a cost effective manner is challenging.
Arauco would like to develop a network optimization model to better understand how to provide a higher level of service to our customers in a more cost-effective manner.
Overview:
Arauco North America is sponsoring a current project with a Georgia Tech student team during the fall 2024 semester that is focused on modeling and analyzing the inbound process at our 10 ports of entry and the associated 12 port warehouse operations. This includes the drayage and warehousing services required to pull containers from the port, strip containers and receive product into the warehouse, and return the empty containers to the port. Analysis includes evaluating the impact to service level and logistics costs based on variability in discharged container volumes in comparison to port warehouse 3PL partner capabilities. In addition, the team is asked to make recommendations on changes that Arauco can make to improve service level and reduce costs.
The focus of this project is to take the model/deliverables created by the first Georgia Tech student team and expand it to include the complete network:
* Add the 11 inland ramps used to dray containers directly to customers.
* Include the outbound shipping volumes and costs by warehouse/inland ramp by customer by mode of transportation.
* Include warehouse throughput and capacity constraints and impacts this have on service capability and logistics costs
With a complete view of our network of ports/inland ramps, warehouse operations, and customer locations, we would like for this project team to help us understand the following:
* In general, are we serving our customers from the proper ports, through the proper methods (container direct vs through a warehouse), and using the proper mode of transportation (container drayage, dry van, or flatbed truck)? What changes would the team recommend and what would be the expected impact to service level KPI’s and logistic costs?
* During times of inbound container volatility , port congestion, or extreme weather events, should Arauco be diverting containers from one port in a region to a different port in the region (Philadelphia vs Baltimore, Charleston vs Jacksonville, New Orleans vs Houston, etc) and what would be the expected impact to service level KPI’s and logistic costs?
* How does Arauco de-risk its network? Is Arauco sending too many containers through a single port/warehouse operation? If another major disruption such as the Baltimore bridge collapse or a major hurricane making landfall in the Gulf, how can Arauco better adapt than it did in Baltimore earlier this year?
Service Level KPI’s include:
* On Time Delivery (product delivered to the customer by the customer required date)
* Dock to stock (time between container discharge and product received into warehouse inventory)
Logistic Service Costs include:
* Container ocean shipping rates
* Demurrage and detention fees for containers used beyond their free days
* Drayage and warehousing costs
* Outbound delivery costs