Logistics company saves more than $5M on packaging supply costs

Kunden:

A world leader in global logistics headquartered in the U.S. with 250 distribution centers in North America, retained the services of ERA for help with cost reduction and consolidation of their supply base.

Utmaningen:

The client was struggling with supplier management and rogue purchasing across their North American locations.

Previously, each location operated autonomously in purchasing goods and services, leading to a plethora of suppliers and materials being utilized. This decentralized approach resulted in operational inefficiencies with hundreds of different suppliers and material specifications across the enterprise.

Lösningen:

ERA’s specialists approached the challenge by focusing on specific packaging material categories critical to the client’s operations, including stretch film, corrugated, labels, and miscellaneous packaging supplies.

ERA collected transaction history and service requirements for all North American locations, creating a comprehensive matrix of suppliers, requirements, and pricing for packaging supplies across the enterprise. The proposed solution involved the consolidation of packaging specifications and suppliers. On evaluation, ERA’s specialists were able to recommend standards for packaging materials and optimal packaging methods, minimize the number of purchase orders (POs) and invoices, and establish contracts with suppliers — tying pricing to nationally recognized indices for relevant commodities.

In addition to cost consolidation, ERA provided best practices and industry insights, testing and trialing various packaging materials to ensure optimal packing.

Resultatet:

The recommendations by ERA’s specialists created operational efficiencies for the logistics company with savings exceeding $5 million annually! By reducing the number of stretch film suppliers from more than 100 to one and reducing the approved number of stretch film specifications from more than 200 to eight, the client is now able to easily monitor metrics in their internal ERP system to ensure optimal solutions and sustained savings.

The optimized procurement strategy aligned with the client’s goals and operational efficiency objectives. Furthermore, the additional cash flow generated from ERA’s packaging supplies specialists supports M&A activity, demonstrating the client’s strategic approach to utilization of resources for growth.