Transport and carrier optimization

The customer is a large manufacturer of bulk and packaged chemicals with a sales volume exceeding 2 billion euros, transport flows from 8 plants and 9 warehouses to over 12,000 ship-to locations all over Europe. The transportation budget reaches 25 mil.

Assignment

  • Optimize the overall transport network and optimize the number of carriers
  • Determine the lowest overall transportation costs within pre-set service objectives, while minimizing the total number of carriers and transport management effort, maintaining lead time requirements, and adhering to basic conditions like reliability, safety and quality

Project summary

BCI gathered transport data, facilitated an RFP process and analyzed multiple relevant scenarios. Ultimately, a less complex and lower cost structure was realized.

Our approach

  • Collecting flow, service and cost data on the current transport lanes to act as a base case
  • Determining site and product handling/transportation requirements
  • Establishing a transport baseline to enable a scenario cost comparison. The transport cost baseline represented the summed-up cost of all transportation lanes in the supply chain network
  • Optimizing the current transport network by assessing multi drop potential, zone skip and line haul solutions, consolidation/deconsolidation aspects, virtual consolidation opportunities and service level harmonization
  • Based upon the baseline, the requirements and the optimized network, a shortlisted number of carriers were invited to quote on all (or a part) of the transport lanes. BCI uses an advanced tool – TenderTool - which facilitated complex mathematical transport cost calculations with many variables. TenderTool is powered by ControlPay, which is one of BCI’s partners
  • After receiving and processing all quotes and capabilities of the carriers, BCI conducted multiple scenario analyses by geography, lane and modality to understand the improvement potential for our client and optimize the number of carriers
  • These analyses were used during several workshops to decide on the next steps. The carriers enabling the most attractive and feasible solutions were invited to the contract negotiations, which were facilitated by BCI
  • Transport carrier selection
  • BCI supported in drafting the letters of intent and the contracts

Result

The transport optimization and carrier optimization initiative led to enhanced control due to the reduction of the number of carriers from 87 to 15, which significantly reduced the management and administrative effort without affecting lead time and quality. A total yearly landed cost reduction of 16% (4M Euro) has been achieved.