Business Challenge
Improving distribution strategy by analysis of distribution spend.
A European online retailer wanted to improve its product distribution by analysis of the spend on in-house versus 3rd party logistics providers and determine the best distribution options.
Situation: Determining between in-house and 3PL distribution
The client used 3rd party logistics (3PL) provider for transportation of its products from production plants to non-local warehouses, while it leased fleet and managed in-house transportation for local warehouses. Client wanted to evaluate the cost of self-managed transport service versus using 3PL in non-local transport, and recommendations on the best possible options.
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Solution
Spend analytics to determine the expense and cost benefits of each option.
We mined all of the client’s historical and real-time transportation data for all deliveries, used spend analytics to monitor the transport and logistics costs, predict the potential cost outlays and savings from the change in transportation method, and identify the most efficient methodologies.
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Impact
USD 10 million savings in a year.
Based on our insights, the client switched to self-managed transportation, using a leased fleet across a few closer outbound destinations while retaining 3PL service for distant locations. The client realized USD 10 million in annual savings with improved distribution management.
