Benchmarking costs to test assumptions
Our client had recently undergone a change of ownership. The new board requested that the company’s current 3PL and freight operations be tested in a RFP process to benchmark costs. The board was also convinced that relocating the 3PL operation from Sydney to Melbourne would significantly improve costs since the major suppliers were based in Melbourne.
Formal tender eliciting commercial and service improvements
After an intensive review of operations, processes, order and freight data, Prological developed a detailed and comprehensive RFP pack and engaged the 3PL and transport industry in a highly competitive and collaborative process to:
- encourage respondents to explore more efficient operations (including automation)
- explore commercial and service options related to segmenting the warehouse and freight functions in a multi-supplier solution
- obtain 3PL and freight costs for both Sydney and Melbourne-based warehousing options.
Incumbent addresses inefficiencies, reducing costs and improving processes
Our client received a 11% reduction in 3PL and transport costs with the retention of the incumbent service provider.
The result was driven by the engagement process which provided the stimulus for the incumbent to review inefficiencies and identify operational changes that would both reduce our client’s costs and maintain/improve supplier margins.
In addition to the savings, it the process also determined that a Melbourne-based 3PL would increase costs and decrease service levels into QLD.
