An $825M manufacturer of water heaters was a facing a double-digit logistics cost increase against single-digit net sales decline and needed a “fresh set of eyes” to evaluate operations and find cost savings, targeted at 10%.

It was a tall order and one that required a comprehensive audit of logistics operations, which was conducted over 4 months. Our team reviewed manufacturing and logistics operations, processes, and policies, gathered and analyzed data, interviewed manager and associates, reviewed IT systems and service contracts, applied leading industry practices and improvement principles and techniques to product numerous cost saving solutions.

Our team found many gaps and offered the following solutions with tangible performance and cost savings.

• In-sourced transportation management to save $1.4M including TM process re-design from order release to delivery, freight cost analysis, new procedures and guidelines, staffing plan and budget, manager training, and justification for investment in a state-of-the-market TMS with ROI in four months
• Increased truckload utilization for $3.3M in savings by using optimization software to reveal average utilization of 65%, developing solutions to improve stacking, and increasing utilization to 80% for an $825M water heater manufacturer.
• Improved carrier management for $2.4M in savings from freight analysis of carrier consolidation, rate competitiveness, carrier assignment, compliance and invoicing, which led to implementation of new procedures, guidelines and metrics to cut costs by 10% on $24M in outbound spend.
• Eliminated dedicated fleet operations for 20% cost savings, justified by evaluation of dedicated fleet competitiveness on a total cost per mile basis to reveal a $0.9M gap against $4M in spend. Near-term, repositioned the fleet to increase cost savings and generate backhaul revenue and later cancelled the DCC contract to gain $750k in net annual savings.
• Closed customer freight policy compliance gaps for $5.6M in cost savings from non-billed charges, excess allowances and unprofitable customers. Developed a new incentives for freight-efficient orders and control procedures.