Insights

Case of Transportation Business Processes Optimization – Production Company with a Global Footprint

February 20, 2019 | Supply Chain Management

“Transportation is an extensive and costly process for manufacturing companies. Many details sink in that massive flow of operations. Although those little pieces still strongly impact the whole system.”
Viktor Mikla, Founder/CEO, Team Lead for the Project

The customer has 12 factories around the world, placed in Europe, Asia, and the USA. In that case, we had the real challenge: high complexity & big expectations & very result oriented.

“When we launch the optimization, it was clear, that we need to go through all processes and steps with an audit for better understanding the real picture on every facility. Of course, we knew about the global scale and the volumes of operations and the complexity of those flows. However…
Just imagine!
These are hundreds of transportation ways, thousands of tonnes of cargos and hundreds of thousands of products’ and material options!”

On the other side, the goal for the project that was set by the customer was at least 10% cost saving & to save service level & transparent and controlled process for all factories.

Well, I had to sort out all of that!

Firstly we took a closer look at the tendering process. The way how the client used the cargo services was not clear neither financially effective. There were no definite criteria for carriers selection.

The client did not have all the information because a part of the tendering operations was out of control. No integrated system for collecting data and providing any analysis. Everything was in Microsoft Excel. It seemed the control over the transportation process was quite vague.

Thus we find out the key tasks

  • Process optimization
  • Implementing the relevant software systems to gather all the information, conduct the operations and assume the KPI’s
  • Creating the procedures of appraisal and selection of preferred service providers (partners)
  • Building the data system for an integrated statistic of quotes (history, budget, forecast, actual)
  • Avoiding misuses

Considering the goals and tasks the only way to reach the goal was to create a new business process (BP) to replace the old one. So we did it.

However, to be honest, the real challenges were not in software development or accounts. These were in people management, coordination of the transformation and motivation of the local teams from the production sites for BPs’ changes.

What did we do for that?

  • We engaged local management in plan elaboration
  • We launched the education program
  • We provided continuous support

Now it sounds easy but the project was a real rush hour for the team!

So there were 1st-year results

  • Fully automatic reporting
  • Automated tendering process discharged about 45% working time of transport administrators and other people engaged in transportation flows
  • Full control over the transportation processes including all routes and kinds of transport

 

So finally – the company saved 23% of the transportation costs!
It meant EUR 3.5 M of savings.

It was a real success! We exceeded the expectation twice!

However, after 1st year we wanted more and knew we could do that! We went on and continued to track processes and collect data. During the 2nd year, we updated the budget using 1st-year stats and approved BPs on the local level.

Finally, we had furthermore increasing figures and got amazing outcomes.

Viktor Mikla
Founder/CEO, 
Expert in Business Development and Business Processes