Logistics leaders are under constant pressure to find ways to save money and improve performance. One impacts profitability, and the other impacts revenue.
But just reacting to issues and requests doesn’t really deliver on these expectations of savings and performance improvements. It might give you the insights. But that’s about it.
Our approach is to combine the best aspects of a Category Plan that is typically produced by procurement and focuses on the commercial aspects (market, rates, spend, etc.), and an Operations Strategy Plan that focuses on execution efficiency and network optimization.
Developing an annual logistics strategy will help cut costs, improve service levels, and drive overall business success while turning complex logistics challenges into opportunities for growth and efficiency by leveraging data-driven insights.
But cutting costs without sacrificing service quality is easier said than done. That’s where we can help.
With our expertise creating logistics strategies for multiple companies across industries and regions, you’ll not only open up sightlines to immediate savings but also set the stage for long-term improvements.
Read on to see how we transformed the logistics performance of a large global shipper – and how we can do the same for you.
Our client faced several logistics challenges that were impacting their overall performance and profitability:
- Escalating Logistics Costs: They were struggling with rising logistics costs which were eating into profit margins, with no clear budget or savings plans.
- Lack of Visibility: There was a lack of visibility into logistics performance, leading to inefficiencies and missed opportunities for improvement.
- Fragmented Processes: The logistics operations were fragmented across different regions and business units, resulting in inconsistent performance and competing objectives.
- Minimal Engagement with Carriers: The company had minimal engagement with carriers and 3PL’s, leading to suboptimal contract terms, poor service levels, and high rates.
- Manual Processes: Many logistics processes were manual and inefficient, resulting in high error rates and slow response times.
To address these challenges, we helped them develop and implement a comprehensive logistics strategy plan.
Even though the details can differ across organizations , our process is based on the following framework which is tailored to every client:
- Spend Data Collection: Detailed spend data for all modes and regions was collected and analyzed to create a clear understanding of total inbound and outbound transportation and warehousing spend.
- Contract Review: Existing contracts were reviewed to benchmark rates, assess compliance, and identify unmanaged spend.
- Benchmarking: Rates, contract terms, and service level agreements were benchmarked against peer groups and industry standards.
- Stakeholder Interviews: Interviews were conducted with key stakeholders to capture requirements and evaluate current performance.
- Market Analysis: An in-depth market analysis was performed to understand the competitive landscape and identify trends and savings targets across modes and regions.
- Maturity Assessment: The company's logistics execution and procurement capabilities were evaluated to identify areas for automation.
Opportunity Identification
- Savings forecast: Itemized improvement opportunities were quantified using the outputs above and mutually agreed-upon assumptions, constraints, and dependencies.
- Opportunity Pipeline: An opportunity pipeline was created, prioritizing projects based on ease of implementation and financial impact.
- Wave Plan: A wave plan of projects was developed to systematically implement the cost-saving initiatives deemed highest priority.
- Stakeholder Review: The opportunity assessment was reviewed with stakeholders, and feedback was incorporated to refine the plan.
- Approval and Sign-Off: Formal approval and sign-off were obtained from organizational leadership.
- Project Plan and RACI: Detailed project plans and RACI matrices were developed to guide implementation.
- Progress Reporting: Regular progress reports and reconciliations were conducted to track the implementation.
- Adjustments: Adjustments were made as needed to ensure the plan remained on track and achieved the desired outcomes.
- Cadence: an annual process was implemented to review plan progress, update the plan based on new requirements and opportunities.
The implementation of the strategic logistics plan resulted in significant improvements in logistics cost and performance, including:
- Cost Savings: The company achieved a 15% reduction in logistics costs, translating to millions of dollars in annual savings, driven by rate reductions and carrier compliance programs.
- Enhanced Visibility: Improved data analytics and reporting provided greater visibility into logistics performance, enabling better decision-making across teams and departments.
- Streamlined Processes: The integration and automation of logistics processes reduced manual errors and decreased tendering and procurement cycle times by 20%.
- Improved Carrier Performance: Enhanced engagement with carriers led to better score carding and service levels, improving OTIF by over 10%.
- Organizational Alignment: The strategic plan fostered greater alignment across regions and business units, leading to more consistent and effective centralized logistics management and the creation of a ‘global logistics council’.
This quick overview demonstrates how a well-executed logistics strategic plan can address critical challenges, drive substantial cost savings, and improve overall logistics performance. By leveraging data analysis, stakeholder insights, and a structured implementation process, companies can transform their logistics operations and achieve lasting benefits.
Ready to transform your logistics performance? Contact us today to develop a tailored strategic plan that meets your unique needs and drives real results.
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