Logistics outsourcing

teamwork

Customers base their judgement of a supplier on the contact they see the most. This is usually the logistics operation, so when you assess how best to meet your customers’ needs, the provider of the service is as important as the infrastructure itself. Whether retendering existing operations, or as part of a larger network review, a robust and objective selection process is the

only way to make sure that the partnership delivers short term benefits whilst being a platform for growth. Strategy, internal capability and cultural fit all need to be considered to select the right partner, and building the trust and teamwork so vital in a successful long term relationship must start during the tendering process.

FITTER, FASTER, STRONGER

Trust &Logistics

Logistics outsourcing“This com

pany

has changed

fundamentally,

and for the better,

due to Crimson.”

Production Director, Nobia

Client successes

Critical get-rights

Benchmark current operation

Understand current performance compared to the market norms and identify potential opportunities.

Identify potential contractors

Consider geographic and operational scope of services and capability.

Manage detailed RFP process

Clearly define all parties’ responsibilities; assess cultural fit, service provision, cost and evidence of initiative.

Support negotiation

Develop a negotiation strategy that bases a contract on partnership mutual benefit.

Implement sustainable change

Establish KPIs and a contract management process that drives on-going improvement.

Proven capabilityOur top down approach considers all credible options, providing deep logistics market knowledge and practical implementation skills.

European electronic games manufacturerRationalised European DC network from 7 to 2, facilitating local finishing and significant stock reduction.

UK kitchen companyCentralised control of customer deliveries from branches, cutting total spend by 15%.

UK stationery supplierSelected and implemented single DC and transport operation, so reducing direct supplier deliveries and store stockholding.

Global soft drinks supplierRetendered logistics operation, reducing costs by 20% by moving from dedicated to ‘white’ fleet.

Fix a ‘broken’ operation before outsourcing. Don’t outsource existing inefficiencies.

Define required service and safety targets in the tender; let the contractor explain how these will be achieved and sustained.

Understand cost drivers and expected costs before going to tender, so strengthening the negotiating position.

Build continuous improvement targets and reward mechanism into the contract.

Over-manage the start-up, as performance can be expected to dip temporarily during initial implementation.

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Logistics outsourcing

Challenge

• Lack of effective management control was resulting in cost overruns and unacceptable service levels

Key actions

• Diagnosed current process and operational issues to identify opportunities• Managed tender process and concentrated on selecting a contractor with strong cultural fit• Developed negotiation strategy to give short-term benefit and ongoing improvement framework

Benefits

• Built effective management control into new contract• Achieved cost savings of £3m-£3.5m• Reached industry-norm service levels

Challenge

• Cost base uncompetitive with neither contractors nor internal functions seeking continuous improvement

Key actions

• Defined the areas and scale of operational overspend• Modelled opportunities to combine DCs and reduce total cost, and selected preferred option• Optimised mix of own and contracted transport

Benefits

• End of ‘one size fits all’ model of servicing customers based on consignment characteristics• Transport costs reduced by 20% and DC operations costs cut by 15%• Service levels maintained during implementation

European mail order

“Providing a differentiated offering to customers improved the service, and significantly reduced the cost to serve to each customer group.”Managing Director

UK leisure sector

“They developed solutions that generated quick wins as well as supporting the longer term strategy.”Supply Director

Case studies

For more information please contact: logistics@crimsonandco.com Tel: +44 (0) 845 644 6972

www.crimsonandco.com

Crimson & Co is a management consultancy focusing on the end-to-end supply chain. Globally known for proprietary tools such as scprime®, we provide the highest possible quality of supply chain consultancy services to our clients. Our consultants have operational experience which they combine with their consulting expertise to provide independent and pragmatic solutions focused on improving our clients’ bottom line.

Our objectivity and independence allow us to focus completely on our clients’ issues and needs, and our expertise and end to end perspective ensures that our solutions work across the supply chain and are aligned to the wider business. We have gone from strength to strength since formation in 2003, working with companies across the globe including Avon Cosmetics, Burberry, Diageo, Merck, Nobia, Shell Lubricants and Tesco.