Imagine a 150-year-old industry titan losing ground in the complex chess game of supply chain management—only to reclaim dominance through bold decision-making and strategic reinvention. The story of Armstrong World Industries offers a masterclass in corporate resilience.
The Outsourcing Dilemma: A Short-Lived "Honeymoon"
In January 2007, Armstrong World Industries—a $2.8 billion manufacturer of flooring, ceilings, and cabinets headquartered in Lancaster, Pennsylvania—made a radical decision: outsourcing its transportation function to a major third-party logistics provider (3PL). The arrangement lasted less than a year before collapsing. The reason was simple—the 3PL's solution failed to meet Armstrong's cost and service targets.
"The fundamental issue was our 3PL's 'one-size-fits-all' approach," explained Marcus Smith, Armstrong's transportation procurement manager. "We had specialized needs—flatbeds, dry vans, driver-assisted vehicles, and short straight trucks for New York City deliveries. They never grasped our operational complexity."
Reclaiming Competitive Advantage: The Return to Customized Service
Transportation management had once been one of Armstrong's core competencies. "Carriers were practically an extension of our business," Smith recalled. But under 3PL management, this personalized service eroded. At its peak, Armstrong required 120 trucking companies to serve 32 plants across four divisions—an unsustainable model that bred chaos.
Service complaints multiplied: late deliveries, missed pickups, and frustrated clients demanding their "regular" carriers back. "Whether it was our communication gap or their failure to prioritize service, we couldn't tolerate delays," Smith admitted. "They underestimated our standards."
The Strategic Reversal: Taking Back the Reins
By late 2007, Armstrong's leadership recognized their mistake. After evaluating bids from four competing 3PLs and analyzing internal restructuring costs, the numbers were staggering: an in-house model proved 60% cheaper than their current 3PL and 40% below the lowest external bid.
"When we crunched the numbers, we were shocked," Smith said. "Every 3PL promised 7-10% savings. Yet our internal model outperformed them all—by half."
The company assembled a seven-person internal transportation team—three new hires and four existing employees—replacing the 3PL's ten staffers. "We didn't just bring transportation back in-house," Smith emphasized. "We built a rigorous process for carrier management, scoring, and expanding business with top performers."
Data-Driven Excellence: The New Operational Playbook
Armstrong's revamped strategy focused on balancing cost efficiency with premium service. Key initiatives included:
- Implementing Chainalytics software for biannual carrier benchmarking
- Weekly bid monitoring and departmental reviews
- Monthly freight cost analyses by route, budget, and facility
- A seven-metric carrier scorecard system with monthly evaluations
"Our carriers take these scorecards seriously," noted Howard Liddic, Armstrong's outbound transportation manager. "They know it directly impacts their standing with us."
Specialized Solutions for Unique Challenges
Armstrong's diverse equipment needs—from curtain-sided trailers to 40-foot straight trucks for NYC routes—required deep carrier collaboration. One innovation involved Jagtrux, a core carrier that developed custom trailers eliminating costly loading procedures for flooring materials.
"We saved all their handling expenses," said Jagtrux president Jim Germak. "We deliver finished products one way and bring back raw materials—it's a perfect loop."
Other breakthroughs included deploying temporary trailers at recycling facilities and replacing sporadic rail shipments with specialized hopper trailers for volcanic perlite—a flooring ingredient.
Measurable Results: 15.4% Cost Reduction and Service Gains
The outcomes exceeded expectations:
- 15.4% overall reduction in per-unit transportation costs
- On-time delivery improved from 95.2% (2008) to 96.7%
- Shipping errors dropped from 396 to 177 annually
"We're extremely satisfied," Smith stated, though he clarified this wasn't an indictment of 3PLs generally. "Good 3PLs absolutely have their place. But for our specialized needs, an internal team works best."
Armstrong's story demonstrates how industry leaders must continually reassess supply chain strategies—and have the courage to reverse course when circumstances demand.