Courier services: a case study of demand management

demand management couriers

Someone clearly messed up with addresses. Parcel was delivered, Mr. Cameron opened it. Inside, there was a nicely wrapped “Exit”. There are situations, when “Exit” is undoubtedly the best thing to have. Not all of them are so obvious. I am pretty sure someone is still waiting for their “Exit”. However that subject will evolve – the world does not stop turning. The courier simply drove off to deliver next and next and then even more shipments.

Situation, one might say, quiet simple: a company with multiple locations. Some of them are production units; some of them – production and R&D; some of them – only sales offices.

Task: review courier services with a goal to achieve savings.

First step, logically, would be to analyse current situation:

  • types and quantities and locations of company satellites (collection points);
  • types of services used (product specific (ADR, frozen), service specific (standard, express, extremely express);
  • delivery points;
  • fee structure (prices, surcharges);
  • ordering processes (people, systems / tools, policies).

Next – you would have few alternatives. You can simply go out and do only price tender. Could be (relatively) fast and dirty exercise and, depending on category maturity and market conditions (fuel price), you could expect the results to be anywhere from minor price increase to 15-20% reduction (congratulations if you get that much!). And, of course, there are many tools to help you out along the way (tender, reverse auction, negotiations, etc.).

What I have seen being done previously and it paid off – big time – was to go the demand management way. This is the second, potentially, harder way. We asked ourselves questions regarding the nature of the spend.

  • is there inter-company document shipping? Can you change it with online systems? (DocuSign and similar).
  • Is there inter-company express shipments? Do they need to be express shipments? Can they be planned, consolidated?
  • Could we challenge ALL company shipments to be standard and consolidated?
  • If yes to all of the above – can we use post instead of courier services? (again – if we really need to send this way)
  • Special shipments. In our case it was frozen product samples. We challenged all intercompany sample shipping. In the end, the items were stored in the location where they were produced and shipped to external receiving party directly.
  • Non-document, not-special shipments. Those were samples of ingredients (dry products), packaging, marketing material), being exchanged between our own locations. With this subcategory we had three outcomes. Some of them remained as they were – real, genuine need. In some cases, instead of sharing ingredients between the company locations, we instructed R&D to ask for samples from suppliers. Suppliers were happy to cooperate and we got free of charge samples and shipping (YAY!). Part of shipping back and forward dissapeared.

To wrap it up, after all the exercise was done, we had 45% savings, as compared to the baseline budget. Hooray to us!

So, there you go – one more example of critical thinking and expert judgement. You can learn all CIPS, APICS, six or more sigmas – they will give you all the tools in the world to handle and manage data which you have already at hand. To improve something. But when it comes to changing (patterns, items, processes, thinking), the most important tool sits between your ears. And that means – anyone and everyone has access to it!

Thanks for reading!

Courier services: a case study of demand management

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