Distributor outsources risk, enjoys huge benefits
Key players from Cedric Millar Integrated Solutions worked with a hard goods distributor to double proposed cost savings and provide 95% on-time delivery. It’s proof that the strategic, data-driven services of a true 4PL partner can move a customer from shipping air to breathing easy.
The customer
A distributor of hard goods delivering to a network of 4,000 independent dealers across Canada.
The financial picture
Transportation costs were 14% of annual revenue and rising. Dealers covered only 7%, with no tolerance for increases.
The ask
Reduce costs and improve service levels, if possible, within a 6-month rollout. Keep current carrier.
The proposal
10% decrease in transportation costs.
The contract
Guaranteed cost savings and delivery standards or the customer could say
goodbye without penalty.
The results
20% decrease in transportation costs. 95% on-time delivery.
The details
The customer had two key problems: data and dealers. On the data side, the customer’s ERP wasn’t freight-friendly, so there was no visibility into transportation costs. There was no strategic supply chain expertise either in-house or at the 2PL carrier doing the deliveries, either.
On the dealer side, there was no tolerance for increased delivery charges and high delivery expectations in terms of frequency, timing, condition and diversity of product ordered. Ordering had large seasonal swings.
BEFORE
“Shipping air”
- 50 trucks left one distribution centre each week
- Each truck was 50% full
- Point-to-point, dedicated route model to reach dealers in central, eastern and southwestern Ontario. Linehaul-crossdock-LTL combination to reach dealers in northern Ontario and western Canada. Poor sequencing. High rates.
AFTER
“Breathing easy”
- 20 trucks left one distribution centre each week (60% reduction)
- Each truck was 70% to 80% full (20% to 30% increase in load)
- Multiple deliveries were combined on one truck. Other savings came from smarter sequencing, lower rates for remaining LTL deliveries, playing to the strengths of four different carriers, and minimizing deadheading using dealer returns and vendor pickups.
CUSTOMER BENEFITS
- Access to real-time data on network
- Trackable KPIs
- Packaging redesign to more efficiently fill trucks
- Scalable solution to deal with seasonality
- 4PL provider is responsible for carrier relationships and targets
- Can leverage 4PL provider’s transportation buy to reduce costs
- No need for in-house strategic resources
- No risk because can break contract if guarantees aren’t realized
THE PROCESS
STEP 1 Research and refinement
4 months
On-site observations at distribution centre and cross-docksDealer surveyInterviewed key people at customerRFQ for carriersNetwork refinementRecommended changes at carriers and customer to increase efficiency
STEP 2 Rollout
4 months
Month 1: Launched in OntarioMonth 2: Launched in western CanadaMonths 3 and 4: Launched in Quebec and eastern Canada (not part of original contract)
