Synopsis
- A steel producer moved to standardize freight equalization across the material production mills in one division.
- Each mill had built its own approach to the process, and no consolidated view existed of how those approaches compared.
- BP3 ran Goals and Alignment Workshops with executives and the operational teams who run the process daily.
- The workshops surfaced each mill's challenges, pain points, needs and opportunities, then aligned the group on high-level goals.
- Those goals were broken into SMART objectives and prioritized by value, producing a sequenced roadmap for standardization.
Article
A steel producer worked with BP3 to align executives and mill teams on a single set of goals for freight equalization, producing a prioritized roadmap for standardizing the process across a division. The work was deliberately sequenced: alignment first, then a defined set of objectives, then improvement.
What is freight equalization, and why is it hard to standardize?
Freight equalization is the practice of absorbing part of the shipping cost on a sale so a customer receives a competitive delivered price regardless of which mill produces the steel. When a mill sells outside the territory where it holds a natural freight advantage, it takes on the difference between its own freight cost and that of a closer producer in order to quote a comparable delivered price. Sales to nearby customers, where the mill already holds the advantage, are typically priced from the mill. The trade-off is direct, because every dollar equalized comes out of the mill net.
That makes freight equalization a pricing decision, a logistics decision and a margin decision at the same time. In a single-plant business, one set of rules can govern it. In a multi-mill division, each plant faces a different map of customers, lanes, competitors and carrier rates, so each one develops its own working method for deciding when to equalize and by how much. Standardizing the practice is difficult because the practice is genuinely local, not because it is poorly run.
Where did the division start?
The division wanted to improve the efficiency of freight equalization across its material production mills and recognized that it needed a clear starting point before it could act. Three conditions shaped the work:
- Each material production mill operated autonomously and followed its own set of practices, built around the customers and lanes it served.
- No single consolidated view existed of the specific process each mill used, so the mills could not be compared against one another.
- The detail of how the process actually ran sat with the people who ran it, and had never been captured in a shared, documented form.
Earlier attempts to synchronize practices across the mills had proved difficult, which is a common outcome when standardization begins with a target-state design rather than with a shared understanding of the current state. The division chose a different sequence this time and brought in BP3 to establish that understanding first.
How did BP3 run the Goals and Alignment Workshops?
BP3 designed and facilitated Goals and Alignment Workshops that deliberately combined organizational leaders with the operational team members closest to the process. Putting both groups in the same session matters, because leaders hold the strategic intent and the operational teams hold the working knowledge, and standardization depends on both being represented in the same conversation.
The workshops ran in three stages:
- Evaluate. BP3 worked through each mill's specific challenges, pain points, business impacts, needs and opportunities within its freight equalization process, building the comparative view the division had been missing.
- Align. The group agreed on a set of new high-level goals aimed at resolving the challenges identified and meeting the needs the teams had raised.
- Decompose and prioritize. BP3 broke those high-level goals into SMART objectives, each one specific, measurable, achievable, relevant and time-bound, then ranked them by the value they would deliver.
What did the division get out of it?
Two outcomes came from the workshops.
The first was a collective understanding of freight equalization challenges and pain points across the organization. Leaders and mill teams left with the same picture of how the process ran and where it differed, which is what makes a standardization decision defensible rather than imposed.
The second was a prioritized list of SMART objectives. Because each objective is measurable and time-bound, and because the list is ordered by value, the division gained a roadmap it could execute in sequence, starting with the changes that return the most.
Why start with alignment rather than technology?
Freight equalization is a decision process, and decision processes are only worth automating once the decision logic is agreed. Applying process orchestration or intelligent automation to a process that five mills define five different ways would encode the divergence rather than resolve it. Establishing shared goals and a prioritized objective set first means any subsequent standardization, system change or automation work has a definition to build against.
This is the pattern BP3 applies across business process optimization engagements in manufacturing: understand how the work is genuinely performed at each site, agree what good looks like, and only then decide what to change.
What can other multi-site manufacturers take from this?
Divergent practice across autonomous plants is a normal feature of multi-site manufacturing, not a defect. The practical lesson from this engagement is one of sequence. Standardization efforts that begin by asking each site to describe how it actually works, and that put executives and operators in the same room to do it, produce a target state the sites recognize and can commit to. Efforts that begin with the target state tend to meet the difficulty this division had encountered before.
If a process on your estate is run several different ways across several different sites, a facilitated alignment exercise is usually the cheapest first step available.
See how BP3's business process optimization and consulting teams approach multi-site standardization.