Project Title: Reducing Transportation Costs and Improving Speed to Market for a Home Renovation & Remodeling Client
Challenge:
A leading Canadian home improvement company experienced rapid e-commerce growth in response to COVID-19. However, this growth led to challenges, including soon-to-expire carrier contracts, increasing demand for faster deliveries, and shrinking profit margins. We were tasked with providing insights to optimize freight contracts and improve delivery speed.
Approach:
We conducted a detailed analysis of the client’s e-commerce network, carrier contracts, and delivery performance compared to competitors. Our focus was on refining fulfillment processes and negotiating more favorable carrier terms.
Key Discoveries:
Our analysis revealed several areas for improvement:
- Fulfillment Location Efficiency: The client’s ERP system had inefficient logic for selecting fulfillment locations, which needed refinement based on population and order density.
- Accessorial & Peak Season Charges: Certain surcharges and seasonal fees were not well negotiated, leading to unnecessary costs.
- KPIs & Visibility: The client lacked well-defined KPIs, limiting their ability to address root causes of inefficiencies.
Solution:
We provided actionable insights, including:
- Refining the ERP logic for fulfillment location selection.
- Optimizing the number of fulfillment centers based on population density.
- Highlighting key surcharges to focus on during contract negotiations.
- Recommending behavioral changes in data entry at fulfillment centers.
- Refining KPIs to be presented via Power BI dashboard.
Impact:
Our recommendations resulted in a 7% year-over-year reduction in freight costs for last-mile delivery and significantly improved customer satisfaction with faster delivery times.