Case Study - Transport
- Electrolux is one of the global leaders in home appliances and appliances for professional use, selling more than 40 million products to customers in 150 countries every year. Electrolux have a strong presence in Australia & New Zealand selling brands such as Electrolux, AEG, Simpson, Volta, Chef and Kelvinator.
- The objective of the project was to reduce the cost of Electrolux’s Australian domestic transport operations through determining the appropriate vendor strategy, improving efficiency and implementing changes to the commercial structure, governance framework and overall price paid.
As part of a broader client engagement, Supply Chain Cover was invited to conduct an end-to-end review of Electrolux’s Australian transport function and identify opportunities to reduce costs. The scope of the study included all manufacturing to DC inter-state and intra-state transport and all DC to retailer transport and customer deliveries; a total of 56 transport providers nationally. The project also determined the appropriate vendor strategy and made recommendation regarding the integration of two separate business units. On successful completion of the review, SCC were further engaged to project manage and implement the recommendations.
- SCC led the project, Phase 1 of which benchmarked the current state against best practice metrics and market prices, as well as reviewing the strategic fit of the current vendors, and the performance and relationship management processes employed.
- Through a broad engagement process the current vendor relationships and commercial structures were assessed against the future strategic requirements of the merged business units.
- An RFI and benchmarking exercise was completed to identify the competitiveness of the current rates.
- Phase 2, the implementation phase involved a rationalisation of transport providers and direct rate re-negotiation, as well as the introduction of a new performance management and payment system.
After this end-to-end study the recommendations were approved by the Electrolux executive team, which included:
- The delivery of a $4.0m p.a. or 22% reduction in outbound transport spend
- A reduction in inter-state transport costs of $1.4m p.a. or 10%
- A step-change in the performance management system and vendor processes
The project of work delivered all the anticipated benefits and was both on time and budget.