Logistics Cost Model helps Sasol International Chemicals improve cost transparency
A trio of Rice University MBA students in Houston, Texas, recently completed a unique three-month project – dubbed Bring to Life – with Sasol International Chemicals’ Customer Fulfillment team, designed to evaluate the logistics cost model in SAP. Through Sasol, Rice University students, Sanober Hussain, Daniel DeRuiter and Emil Binney experienced real-world industry challenges and rewards first-hand.
The logistics cost components involved in delivering chemical intermediates to end customers are intricate. Expenses related to transportation, storage, and handling services, which are managed by contracted third-party logistics providers (3PLs), vary based on specific product attributes. This complexity makes it challenging to manage and optimize costs effectively.
To tackle this management challenge, the Customer Fulfillment team recognized the necessity for a comprehensive analytical model capable of pinpointing the total cost of ownership for logistics. The model was developed to capture and report logistics costs at a detailed level, offering the logistics operations team greater visibility for making cost-efficient decisions and allocating expenses at the sales order level. Additionally, it enhances integration with 3PLs by regularly receiving contracted freight costs. Since its inception, the tool has demonstrated its effectiveness by accurately streamlining cost tracking and allocation across various logistics departments.
“The logistics cost model has great potential and should have broader impact on optimizing operations and driving efficiency across the company,” said Sharendra Panday, senior manager of logistics in the U.S. “But we didn’t have the resources internally to study the issue.”
So, when Professor Todd Cimino, an operations management lecturer at the Jones Graduate School of Business at Rice, was seeking a hands-on project for students in the Supply Chain Studio segment of his class, Sasol was an ideal partner.
“These types of projects mean a lot to the students,” said Cimino. “They give students access to real-world problems they can solve and enable them to build skills you can’t get in a classroom.”
Collaborating with Cimino, Panday, and Keith Chow, Sasol customer enablement specialist based in Houston, the students conducted a comprehensive analysis comparing the model’s cost data with Sasol’s actual invoices.
After validating the model’s accuracy, the students engaged with stakeholders throughout Sasol to assess their perception of the tool. Their efforts led to a comprehensive plan designed to enhance the model’s utilization cross-functionally. Recommendations included establishing a pilot group for training and testing, relaunching the tool with targeted messaging for various stakeholder groups, collecting data on tool usage, and fostering continuous improvement through user feedback.
These types of projects mean a lot to the students. They give students access to real-world problems they can solve and enable them to build skills you can’t get in a classroom. –
Todd Cimino, Professor at Jones Graudate School of Business, Rice University
“Bring to Life was a mixture of data analysis, project management and change management,” said DeRuiter. “It was a great learning experience.”
The students especially enjoyed the opportunity to conduct stakeholder interviews across the company and talk with employees about their jobs.
“Everyone had a great perspective to share,” said Hussain. “It was clear that everyone is very interested in improving efficiency.”
The project ended in the first half of 2024 with a student presentation to their peers and educators. Among those in attendance were members of the executive leadership team.
“It was amazing to present to such a high-level group, and have such a good discussion,” said Binney. “I hope our project brings tangible financial benefits to Sasol.”
Chow said the students’ work has been helpful in determining next steps.
“Going forward, we plan to reintroduce the model to various functional groups within Sasol to improve awareness and adoption of the tool,” said Chow. “We also want to explore opportunities to integrate the model with other existing tools to enhance user experience.”
For Cimino, Bring to Life was the start of what he hopes is a long relationship.
“I hope this project underscores the developing relationship we have between Sasol International Chemicals and Rice Business,” said Cimino. “Both sides can benefit, but it takes commitment to make it work. This project was a great start.”
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