Redesigned global inbound transportation and premium freight for a large Industrial OEM, saving ₹5 MM/yr in EMEA
Key Business Challenges
- 7 different Business Units operated in numerous plants in EMEA sourcing from an overlapping set of suppliers located all over the EU and in US, India, China, Brazil, etc.
- There was no cross-BU regional supply chain group to coordinate supply chain opportunities. EMEA was picked as pilot for this approach given the geographic concentration of plants to evaluate the benefits and requirements for a XBU inbound transportation strategy
Client Expectations
- Determine the potential and feasibility of Cross-BU integration of inbound transportation.
- Design the best transportation model considering Low Cost Country sourcing strategy to minimize the total cost, incl. supplier managed inventory
- Reduce the Premium freight spend across all BUs.
Analysed synergies between 7 Business Units
Analytics/Consulting Project
- Transportation Spend Analysis among many vendors on a common inbound lanes using common Freight Pay provider data.
- Assessment of Load consolidation and rate negotiation opportunities since there was significant commonality in inbound shipping lanes for the various plants.
- Design a new inbound logistics network to optimize transportation and material costs by leveraging cross-business unit synergies to support growth in sourcing from low-cost countries (LCC)
- Analyzed end-to-end supply chains of seven BUs that sourced from all around the globe using all transport modes.
- Determined potential cost savings considering expected sourcing shifting to LCC over the next 5 yrs. Developed a business case w/ 5 yr. savings projection.
Built a detailed BOM based transport model
SUMPURA Delivered Outcomes
- Implemented a cross-BU transport mgmt function resulting in >20% cost savings by increased utilization, reduced transport rates, mode shifting, efficient routing, shorten lead times etc. Created a central team to monitor and manage use of expedited air and premium freight, streamlined rate negotiations with strategic vendors, achieved ₹5MM savings per year in EMEA
- Installed supply chain “control towers” to enhance supply chain visibility and reduce inventories by shortening lead times and lead time variability
Identified ₹23 million in savings (5-Year DCF) with an investment of ₹750,000 for IT systems
