Case Study:

Optimising the cost of transportation in a rising market. Strategic sourcing drives 8% reduction and significant consolidation of the supply base.

 

Client

A European Industrial Manufacturing business with sites across Italy, France, BeNeLux and Eastern Europe that managed the inbound supply chain for raw materials as well as movement of finished goods to a global customer base.

The Challenge

Optimise costs for inbound and outbound transportation in the face of rising prices whilst maintaining supplier capacity and performance in the midst of Covid-19 pandemic.

Approach

A comprehensive spend analysis and review of existing contractual terms provided clarity on the initial situation at the Client’s 5 Business Units across Europe. A lane-by-lane analysis across all transportation modes was then conducted with the primary focus being on Road, Rail and Barge transports for inbound raw materials and outbound finished goods. The team completed a ‘centre of gravity analysis’ to assess where the optimal warehousing locations across Europe should be to maximise utilisation and minimise costs.

Following the detailed analysis phase, the Procura team developed a sourcing strategy in conjunction with key transportation stakeholders at each site. The strategy outlined the route to market and sourcing levers for each mode of transport as well as formalising the execution plan.

Procura then executed the agreed strategy, including running a pan-European tender for road transportation and warehousing as well as conducting key supplier negotiations for rail and barge contracts.

Shipping routes map

Results

  • €10m of run-rate savings through improved pricing and contractual terms.
  • Enhancement of key contractual SLAs and KPIs to allow improved management of supplier performance.
  • Consolidation of the supply base, streamlining processes and improving supplier management

 

Procura provide expert services to clients which can assist as the economic situation recovers and businesses re-set for profitability. We would be very happy to talk through your current challenges and objectives and share our experience.

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