SUMMARY
A food manufacturer’s supply chain was on the ropes after an ill-equipped 3PL mismanaged their freight operation. Delivery delays were running rampant, pickups were getting missed, and potential solutions seemed few and far between. IL2000 set up weekly supply chain strategy reviews and trained their staff in supply chain management. We designed reporting tools that saved the company 10% on freight costs and improved on-time delivery by over 30%. In less than six months, the company’s supply chain transformed from disorganized chaos to cost-effective reliability.
COMPANY PROFILE
Our client is a food ingredient manufacturer that specializes in bulk grain shipment and food storage solutions. With a 50 year history of food manufacturing, the company is an important provider of food ingredients across the US, shipping high quality cooking ingredients to both commercial food enterprises and private consumers. Much of the company’s success can be attributed to the strong reputation it had established for safe food handling. Reliable, efficient and safe food freight practices are critical components in meeting these high expectations. The steady decline of our client’s supply chain operation therefore posed a critical threat to core business.
PAIN POINTS
- The company had limited control over a chaotic supply chain. Poor communication from their previous 3PL created a critical logistics knowledge gap in the company. The company was aware of its diminished on-time performance but had little visibility about why, or guidance on how to fix it.
- Their shipment pricing system was broken and built on an outmoded pre-COVID 19 pandemic methodology. Carrier selection processes assumed a shipper-favorable freight market, an inaccurate perception that left their freight operation poorly positioned and riddled with unreliability.
- The company’s reputation for food delivery reliability had reached a critical low. On-time delivery performance had dipped to around 55%, well below the industry average.
CHALLENGE
Although our client faced a long list of operational challenges, these all ultimately stemmed from a central problem: Poor 3PL communication coupled with an unresponsive strategy had damaged their supply chain. Our client lacked robust supply chain thought partnership.
SOLUTION
Productive 3PL partnership built
The 3PL we replaced left our client under-informed and poorly equipped to handle their supply chain. We knew building up our client’s knowledge base was an important part of any solution. However, having trained many clients in a similar situation, we also knew that skills enhancement must be gradual and incremental. IL2000 designed and implemented a customized supply chain training process that also paved the way for a robust flow of knowledge between our companies. Guiding the company through regular strategic course corrections, we steadily built a smooth and efficient supply chain workflow.
Carrier selection and management overhauled
When IL2000 started working with this partner, we set a goal to deliver a 6% efficiency saving to its freight outlay. Given the scale of its operation and the scope of reorganization ahead of us, this represented an ambitious target — one that would significantly improve our client’s profitability.
IL2000 attacked the company’s supply chain inefficiencies on multiple fronts. Leveraging our proprietary TMS, we equipped the company’s logistics team with more accurate data and a core library of highly customized reports, each geared to improving visibility and decision-making along the weakest points of their supply chain. We also radically reworked their carrier selection methodology and workflow. We phased these enhancements over two months, carefully adjusting our improvement plan to accommodate our company’s priorities as well as shifts in a volatile supply chain landscape. In the end, we eclipsed our target. We hit the 6% savings level in just months. At the six-month mark, the company’s realized savings pushed past 10%.
On-time delivery performance rescued
The company’s reputation for reliability had five decades of history behind it, but severe delivery challenges were chipping away at the company’s impeccable reputation. Our client’s on-time delivery track record had steeply declined in the months leading up to its decision to work with IL2000 and was then hovering as low as 55%. Almost one-half of its deliveries were late. Our first target was to at least bring our client’s on-time delivery performance in line with the national average — which at that time was in the 70% range.
Fixing the company’s delivery problem required an end-to-end supply chain solution, but the foundation for that improvement program was data. Accurate shipment timeframes and carrier performance metrics quantified their supply chain and allowed better forward planning. By enhancing visibility, we revealed opportunities for quick adjustments that shaved days from delivery times. In less than six months, our client’s on-time delivery performance had raced past the national average to hit 90.2% and is still rising. This represented a greater than 35% boost to delivery reliability in under six months.
RESULTS
- Vastly improved supply chain knowledge and planning capacity with ongoing strategic insight from a trusted 3PL thought partners.
- $24,000 in audit savings over 2 quarters with combined actualized freight efficiency-gains of approximately $80,000 (10%) over the same time period.
- On-time performance increased from 55% to over 90% in 6 months leading to improved reputation and customer confidence.
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