Challenge
An internal logistics provider within a large conglomerate was facing operational inefficiencies due to a bloated Full-Time Equivalent (FTE) structure. This inefficiency was not only inflating operational costs but also leading to inflated tariffs for internal customers, undermining the competitiveness and value proposition of the logistics provider. The primary issues included redundant roles, unclear job responsibilities, and a lack of process optimization, which collectively contributed to suboptimal productivity and excessive labor costs.
Actions
To tackle these challenges, a comprehensive optimization project was initiated with the following key steps:Workforce Analysis: A detailed analysis of the current FTE structure was conducted to identify redundancies, inefficiencies, and areas lacking in skill sets necessary for modern logistics operations.Process Reengineering: Alongside workforce analysis, existing processes were scrutinized for efficiency gains. This involved adopting lean management principles, automating routine tasks, and streamlining workflows to reduce the reliance on manual labor.Role Redefinition and Reskilling: Based on the findings from the workforce and process analyses, roles were redefined to eliminate overlaps and ensure clear accountability. A reskilling program was also implemented to equip employees with the skills needed for the optimized process landscape.Implementation of Technology Solutions: To support the newly streamlined processes, the company invested in advanced logistics technologies, including Warehouse Management Systems (WMS) and Transportation Management Systems (TMS), to enhance efficiency and reduce the need for extensive manual intervention.
Results
The optimization of the FTE structure and the accompanying process improvements led to significant achievements:15% Tariff Decrease: The increased efficiency and reduced labor costs enabled the internal logistics provider to offer its services at a 15% lower tariff to its internal customers, enhancing its competitiveness and value proposition.Improved Operational Efficiency: The streamlined processes and clearer role definitions resulted in higher productivity, quicker turnaround times, and improved service levels.Enhanced Employee Satisfaction: The role redefinition and reskilling initiatives helped in reducing job redundancies and enhancing employee engagement through clearer career paths and skill development opportunities.Cost Savings: The overall cost structure of the internal logistics provider was significantly reduced, contributing to better financial performance and allowing for reinvestment in strategic areas.This success story highlights the importance of an optimized FTE structure and efficient processes in achieving operational excellence and competitiveness in logistics services. By addressing structural inefficiencies and embracing technology and process improvements, the internal logistics provider was able to significantly reduce tariffs, benefiting its internal customers and enhancing its market position.
Short summary
An internal logistics provider within a conglomerate faced high operational costs due to an inefficient Full-Time Equivalent (FTE) structure, leading to inflated tariffs for internal customers. By conducting a comprehensive optimization project that included workforce analysis, process reengineering, role redefinition, reskilling, and the implementation of technology solutions, the provider was able to significantly enhance operational efficiency. This resulted in a 15% decrease in tariffs, improved productivity, higher employee satisfaction due to clearer career paths and skill development, and substantial cost savings. These changes not only benefited internal customers by offering more competitive tariffs but also strengthened the logistics provider’s market position.