Challenge
The company was facing escalating transport costs that were significantly impacting its profit margins. The issues contributing to these high costs included an unwieldy and inefficient carrier base, underutilization of loading space, and a lack of dynamic tools for optimizing transport means availability. These challenges were not only financial but also affected the company’s ability to scale operations and respond to market demands efficiently.
Actions
To tackle the rising transport costs, the company embarked on a multi-faceted optimization strategy. The key actions included:Carrier Base Reduction: The company undertook a comprehensive review of its carrier base to identify and retain only the most efficient and cost-effective carriers. This process involved renegotiating tariffs, resulting in an average reduction of 10% in transport costs.Implementation of E-bid Tools: To enhance the availability of transport means and foster a competitive environment among carriers, the company promoted the use of new e-bidding tools. These digital platforms enabled dynamic bidding for transport jobs, ensuring optimal pricing and availability.Changing the Carrier Base Profile: The company shifted its focus towards carriers that could offer higher loading space utilization. Through careful selection and negotiation, a 7% increase in loading space utilization was achieved, contributing to more efficient transport operations.Turnover-Based Bonus Scheme: A turnover-based bonus scheme was introduced for carriers, incentivizing them to offer more competitive rates and higher service levels in exchange for a higher volume of business.
Results
The transport cost optimization initiatives led to significant achievements:Substantial Cost Savings: The company successfully saved 2.8 million Euros in transport costs, directly impacting the bottom line and improving financial performance.Increased Transport Efficiency: The reduction in the carrier base, coupled with the promotion of e-bid tools, led to increased transport efficiency, with carriers more aligned with the company’s needs in terms of cost, availability, and service quality.Improved Loading Space Utilization: The 7% increase in loading space utilization resulted in fewer trips required to move the same volume of goods, further contributing to cost savings and reduced environmental impact.Strengthened Carrier Relationships: The turnover-based bonus scheme fostered stronger relationships with carriers, ensuring loyalty and long-term partnerships focused on mutual growth and efficiency.This success story highlights the effectiveness of a strategic approach to transport cost optimization, including carrier base rationalization, the adoption of innovative digital tools, and the restructuring of carrier incentives. Through these initiatives, the company not only achieved substantial cost savings but also improved operational efficiency and established a more sustainable and scalable transport strategy.
Short summary
The company significantly optimized its transport costs, achieving savings of 2.8 million Euros through a strategic overhaul of its logistics operations. This included reducing and renegotiating with its carrier base to achieve a 10% tariff reduction, implementing e-bidding tools to enhance transport means availability, and changing the carrier base profile to increase loading space utilization by 7%. Additionally, a turnover-based bonus scheme incentivized carriers to offer more competitive rates and services. These measures resulted in increased transport efficiency, stronger carrier relationships, and substantial financial savings, demonstrating the impact of targeted logistics strategies on improving operational and financial performance.