Challenge
Baukrane, leading CEE construction material company growing 20% year over year for 3 years in a row, understood its supply chain strategy does not enable enough scalability and limits future growth. Sourcing, procurement as well as logistics processes were implemented differently across 4 company branches which limited knowledge transfer, made internal cost and efficiency benchmarking troublesome, and a posed risk for the company cost structure.
Actions
To address these challenges, the company embarked on a comprehensive overhaul of its supply chain and warehouse operations strategy with special focus on standarization, automation, and efficiency of processes. The initiative was led by a team of supply chain experts who undertook the following steps: Customer Segmentation: The team conducted an in-depth analysis of the customer base, segmenting customers based on their value, volume, frequency, and specific service requirements. This new classification enabled targeted delivery approach. Delivery Methods Definition: Based on the new customer classification, the team developed SLA and activity cost based calculation for each customer and product type. Revising Warehousing Processes: The warehousing strategy was revamped to ensure aligment with customer segmentation and delivery models. This involved optimizing storage layouts, implementing warehouse management system, and changing quality control procedures. Redefining Planning Processes: Sales & Operations Planning Process was introduced to the company linking commercial plans with procurement and giving logistics function visibility over upcoming volumes.
Results
The undertaken strategic initiatives allowed to decrease customer claim by over 14% as as result of better understanding of all involved parties on customer needs and SLA set in commercial agreements, decreasing company processing costs by 8% on order level, and enable company to transfer know-how and logistics management talent between the branches. New distribution strategy allowed company to decrease transportation costs by 6% within the year and gain visibility on cargo partners performance versus clear KPIs set. Within the project also a new warehouse management system was selected which secured company process stabilizaiton for the future. The side effect of company IT systems architecture analysis was understanding of operational risk by the executive team and taking a decision to upgrade as a next step the legacy ERP system which was used by the company for the last 12 years. With all those changes company supply chain become more predictable and operational costs become stable in relation the processed volumes.
Short summary
Baukrane, a leading CEE construction material company, identified supply chain challenges hindering growth. Through strategic initiatives: customer segmentation, revamping warehousing processes, and implementing new technologies, they achieved 14% reduce in claims, 8% lower processing costs, and enhanced operational efficiency. Upgraded IT systems improved risk management and stability, ensuring a more predictable supply chain.