Reducing costs with local managers to get better value in logistics.

Cambro Manufacturing Company is an American corporation that develops, manufactures and markets products for the worldwide foodservice industry.

We were asked to review the costs and processes of logistics in Europe. As a result of tightening contractual arrangements with their provider of warehousing and, more significantly, from putting transportation services out to tender, annual charges were reduced by over €300,000 – more than 20%.

A number of years later, we were asked to re-tender the contract for transportation services with the focus on improving service while holding cost. Unable to match the previously negotiated tariffs, our scope was extended to include both transportation and warehousing as a single integrated service. Following several rounds of negotiation, DHL Supply Chain was selected to partner with. Service level agreements and a contract were set up. The review of the operations, processes and costs of the warehouses confirmed the scope for improvement. We helped Cambro’s managers:

• to tender for transportation services from hauliers in Germany, France, Italy and the UK
• to reduce or eliminate minimum charges for small parcels
• to examine the potential for making kits in the US and so eliminate the cost of assembly in The Netherlands
• to give the current warehouse provider incentives to cut costs and manage the stock better
• to streamline processes, reduce double handling and centralise order processing
• to reduce stock and eliminate slow-moving items
• to introduce key performance indicators to control service and cost.

In the subsequent project, we worked closely with the Logistics Director from Cambro in the US:

• to identify a range of potential logistics partners
• to request information, analyse responses and determine the shortlist
• to manage an Invitation to Tender process
• to model the potential benefits
• to negotiate the contract
• to plan the initial stages of the project
• to coordinate communications as the project ‘went live’.

Our close understanding of Cambro’s business helped us to draw up tight specifications for the new tenders. And our knowledge of European logistics helped to pinpoint the most suitable partner(s). By conducting a thorough and professional tender process, we were able to ensure that the ambition for service was achieved at the best cost.