Selected engagements from Parth Davé’s supply chain leadership and advisory experience.
Engagement Overview
A leading CPG organization faced escalating logistics costs. Freight expenses exceeded industry benchmarks as a percentage of sales. Revenues were declining, amplifying margin pressure.
The issue appeared to be carrier pricing. It was, in fact, governance drift.
Business Challenge
Transportation costs were increasing faster than sales.
Multiple acquisitions expanded the customer base and warehouse footprint. Legacy accounts placed frequent small orders. Internal transfers between facilities increased. Some carrier relationships operated without active contracts.
Logistics spend was growing, but no structured review mechanism existed to govern cost drivers.
The organization was measuring freight cost. It was not governing the decisions creating it.
Structural Diagnosis
Integrated analysis of shipment data, ERP order patterns, and carrier rate history revealed three structural exposures:
- Customer ordering behavior encouraged frequent low-quantity shipments with ineffective minimum order controls.
- Freight rate auditing had not been conducted for several years, allowing unchecked rate increases and non-contracted carrier usage.
- Internal inventory transfers increased significantly after acquisitions without corresponding network re-optimization.
Transportation cost was not escalating randomly. It was responding to unmanaged structural changes.
When governance lags growth, cost discipline erodes.
Decision Architecture Recalibration
Before renegotiating rates, cost drivers were redefined.
Minimum order quantity thresholds were reassessed to influence customer ordering patterns. A structured freight audit process was designed to benchmark rates and identify contract gaps. Network logic governing internal transfers was reviewed to reduce unnecessary movement between facilities.
Ownership of logistics cost review was formalized with defined cadence and accountability.
The focus shifted from negotiating freight invoices to governing shipment behavior.
Execution Adjustments
Shipment consolidation strategies were implemented to reduce frequency and improve load efficiency. A formal freight rate auditing program was established, and inactive or unmanaged carrier relationships were renegotiated or structured under contract. Inventory positioning across warehouse locations was optimized to limit avoidable internal transfers.
Execution reinforced the recalibrated governance model.
Business Impact
- 12% reduction in transportation costs
- Improved shipment efficiency and load consolidation
- Reduced exposure to unmanaged carrier rate increases
- Strengthened cost discipline across an expanded network
For acquisitive CPG organizations, this demonstrates how logistics cost control requires governance alignment after structural growth.
Governance Lens Applied
Freight cost reflected unmanaged structural drift. Shipment behavior, contract discipline, and network logic were recalibrated before rates were addressed. Cost reduction followed governance restoration.
If Logistics Costs Keep Expanding After Growth
If transportation spend is rising faster than sales, acquisitions have increased network complexity, or shipment frequency is eroding margin, the issue may not be carrier pricing. It may be logistics governance.
A structured Supply Chain Health Check can help clarify where shipment behavior, contract discipline, and network logic require recalibration before cost drift compounds further.