Case Study
Game, Set and Match
Total realized annual savings over 5 years are in excess of 25%
When the cost benefit analysis was completed, each tenderer was ranked on a value for money outcome and two were short listed to present their service offering directly to the client.
Company Overview
Our client, based in Melbourne, is a subsidiary of one of the worlds leading sports equipment companies that develops and manufactures technically advanced products to improve the performance of active sports participants.
The Challenge
To enhance the freight service from their Melbourne distribution centre to customers located throughout Australia. The challenge was to provide not just cost savings, but also to:
- Review shipping methods to ensure a best fit to meet their customers expectations
- Improve systems interfaces between the clients own customer records and those of the freight company, and
- Exceed current KPI’s and SLA’s.
The Process
Before any change recommendations are made it is essential that both ERA and the client understand fully the current distribution profile. In order to achieve this, ERA input over 70,000 consignments covering both typical peak and non-peak periods. Our initial report provided detailed breakdowns of the freight profile that included costings per route and size & type of freight across various delivery parameters.
As is often the case, this detailed review showed that some of the freight was not using the optimum freight service, and savings could rapidly be achieved by switching some freight to an alternate service type.
Following the initial review, ERA managed a tendering process that included modeling the offers against each of the 70,000 consignments. This allowed the client to see what they would have cost if the tenderer’s service had been used for those deliveries.
When the cost benefit analysis was completed, each tenderer was ranked on a value for money outcome and two were short listed to present their service offering directly to the client who then selected their preferred supplier.
ERA then worked with the client and new supplier to implement the agreed freight service and we have continued to monitor the service to ensure pricing, service levels and savings have been maintained.
The Result
- Total realized annual savings over 5 years are in excess of 25% with savings in some areas where the service was altered, exceeded 45%.
- The client has retained ERA on an ongoing basis to review its national freight as well as their international freight and 10 other categories.
- Innovations introduced & ongoing monitoring and product improvement established
- Project completed on time