Freight cost visibility limitations
The domestic freight spend across this $1.9b electrical trade wholesale distribution business was ~$9.3mil, shared across almost 900 freight providers. Although Head Office indirectly carried the freight cost, it did not control branch freight purchasing.
Visibility of freight costs other than at a GL level was a challenge. Based on available information, cost-to-serve and activity level analysis and benchmarking was not possible, limiting continuous improvement programmes and negotiations with carriers.
Design, engage and implement
Prological was engaged to:
- design the fundamentals of a new national freight strategy to align distribution services with branch network and end customer requirements
- redesign supporting processes, business rules and performance monitoring systems to enable the new national freight strategy
- run a national freight tender to engage the right partner/s to operationalise the new freight strategy implement the agreed solution.
National cost reduction opportunities
Prological was able to identify national savings opportunities of between approximately $950k p.a. through our task redesign and our market engagement process.
