The client’s supply chain involved inefficient and redundant intra-site freight movements and value-add processes, with 200+ different logistics service providers acting as a barrier to customer delivery, revenue growth and supply chain optimization.
Dual award + digitalization = immediate market savings
Story
Our client manufactures and services aerospace, defence and marine safety equipment across an extensive global network built through acquisition. The result was a fragmented supply chain, with too many logistics service providers (LSPs) and freight spend not effectively leveraged. The lack of accurate freight data made both supply chain rationalization and freight procurement challenging. High volatility in the freight market provided an additional challenge.
With support from the customer we consolidated, cleaned and imported LSP shipment reports to a single database to map and analyze flows. We undertook a comprehensive survey across 30+ global sites to help better understand local logistics requirements, with a key focus on the complexity of last mile delivery.
Once we had a clear understanding of both internal and external requirements, we issued a global RFI to 23 leading 3PLs. The complete tendering process, underpinned by Pacellico’s proprietary freight procurement software, ensured accurate comparison of offers, targeted feedback to participants for improved 2nd round rate proposals, and award scenario modeling to identify the optimum combination of LSP partners for the final negotiation.
The dual global award, implemented with a customized Pacellico digital booking solution has delivered an ongoing competitive dynamic which guarantees immediate pass-through of market savings to the customer, as each individual shipment is awarded to the most competitive LSP.
LSPs make regular rate updates directly in the system, with detailed customer reports highlighting the impact of rate changes. The solution includes a spot-quote flow for ad-hoc shipments, and delivers supply-chain visibility, transparency and efficiency, with all bookings flowing directly via API to LSP systems.
Conclusion
Through the leveraged tender the client achieved over 14% savings above and beyond savings secured from market trends. With the Pacellico freight booking solution awarding each shipment dynamically, the 2 providers are in perpetual competition, ensuring a further rapid major benefit from reducing market FCL rates. With all freight data live and consolidated, the next step is an analysis of the optimum distribution center network, with outsourcing to 3PLs as a clear customer goal to achieve improved performance, resolve inventory accuracy issues and drive parts availability for service and sales.