Based in Amsterdam West Harbour and with 160 staff, ICL Fertilisers manufactures and distributes their products internationally. ICL produces 500,000 tons of fertiliser every year from phosphate ores mined in the Negev desert in Israel. Over the years, the company has become a producer of high-quality phosphate and potassium products. In terms of sustainability, the company’s goal for 2025 is to entirely replace the phosphate ores from the mines with recycled phosphate from (amongst other sources) manure, ash from burnt sewage sludge, and other residual waste streams that contain phosphate.
Five years ago, ICL successfully completed a cost reduction project on the telecommunications cost category with Expense Reduction Analysts Maarten van Overeem.
Then, 18 months ago, Managing Director Anthony Zanelli contacted van Overeem to see if he would project manage the purchase of a new lease contract for heavy equipment, such as cranes, wheel loaders and bobcats.
This time, the project related to a primary company asset for which improving quality was more important than finding a cheaper solution, with the utilisation of second-hand civil engineering machinery. The type and composition of the substances carried, rich in salt and other penetrative elements had a deteriorating effect on the equipment used, therefore the use of second-hand machines, for which ICL had a lease contract. However, over the years, the equipment became more and more defective, and there were also complaints regarding the comfort of use, such as heating, seat suspension, air conditioning or radio.
Discussions with the supplier regarding the level of service did not lead to improvements that were satisfactory enough. After having renewed the one-year contract several times over, ICL wanted to find a new supplier who could provide a better quality of service.
With this goal in mind, van Overeem enlisted Henk Postmus, an Expense Reduction Analysts expert with a technical background. The first step for the two consultants was to initiate discussions with all parties involved: business management, equipment users and supplier. This showed that the current situation had become something of a vicious circle. Because the equipment was second hand, the employees did not show enough care when using it; and because employees were not careful enough, management did not want to invest in new machinery. As for the supplier, he felt that it wasn’t worthwhile maintaining equipment that was both ageing and carelessly used. And lastly, equipment users did not feel a sense of ownership over the fleet of machinery. Therefore, nobody took the blame for the damage done to the machinery.
Expense Reduction Analysts investigated the market and concluded that both the type of machine and the second-hand brand were fit for purpose, as long as machines were used properly. Therefore the recommendation was for a different approach with regards to equipment management, which would involve all parties. Management had to invest in improved machinery with regards to safety and comfort. Drivers had to go through a monitoring system that followed who operated a specific machine and whether it was operated properly. Contrarily to what management had presumed, drivers actually wanted the monitoring so that each individual would be in charge of their own actions. This new approach was effective for all including the supplier who was kept on.
To ICL’s surprise, financial conditions also improved as, with newer machines and better usage and maintenance, one less machine was needed to complete the same amount of work. Also fuel consumption improved markedly, an improvement on costs as well as on the environment. All in all the quality of materials and services improved significantly at considerably lower costs.
ICL also implemented further improvements that had a positive general impact: floors were levelled on-site, a new car wash was made, and a lighting plan was put in place in the halls to help drivers see better. The pillars in the hall, which were built at the time when wheelbarrows were still used, were painted in yellow to reduce damage. Communication between drivers improved.
All in all, the project was far easier to manage than initially thought and will be monitored over the next five years by Expense Reduction Analysts.
"The consultants from Expense Reduction Analysts conduct proper analysis using their expertise in various fields. They take all points of view into account, which means they hit on surprising solutions. Moreover, the way they communicate with you is excellent: polite and productive."
Anthony Zanelli, Managing Director at ICL