Global Strategic Sourcing Study

Global Transportation – Fortune 200 Diversified Manufacturer

Client Background

With over $4 billion of annual spend, our client is a diversified manufacturer of a broad range of specialized industrial products and manufacturing equipment. It operates 35 historically autonomous business units which have over 200 manufacturing locations globally. In order to improve the competitiveness of their companies, the client selected Gibson to investigate the opportunity in leveraging their transportation spend of over $250 Million.

Results at a Glance

$ 17 MM+
in realized annual savings

reduced the supply base to 14 freight carriers

consolidated the spend among 270+ shipping locations

standardized fuel surcharge program across all modes

standardized accessorial charges

Challenge

Facing cost pressures from competitors and investors, client requested Gibson Consulting to fully unify their transportation requirements across a decentralized organization and leverage over $250 million in spend across five modes.

Evaluation

The Gibson team gathered and analyzed the client’s shipment and service requirement and potential cost savings for over 270 shipping locations.

  • Conducted interviews with cross-functional teams and facilities management teams and gathered extensive data to benchmark costs and processes.
  • Identified opportunities to work with suppliers to obtain lower overall cost.
  • Recognized need for skill-based training and development of a project work plan and timeline to develop the sourcing organization.

Approach

To achieve total cost savings, Gibson Consulting implemented a global Strategic Sourcing project targeting the client’s $250+ millions of transportation spend across Air, Ocean LCL, Ocean FCL, International Parcel, Truckload, and Less-than-Truckload.

  • Gathered over 800,000 shipments representing the current state of approximately 55,000 active shipping lanes.
  • Surveyed over 1,000 global shipping providers across all modes.
  • Developed an online quoting tool to tender the multi-mode, multi-region RFQ to the market.
  • Defined and carefully developed category specific negotiable issues.

Results

Cost savings were achieved by reducing the client’s supply base and significantly improving alliance management.

  • Realized $37.3 million in savings annually for quoted lanes.
  • Recognized additional $20.3 million in savings on other 49% of global spend.
  • Realized $1.2 million annually in free cash flow improvement through payment terms.
  • Reduced supply base by over 90%.
  • Defined geographic selection process for ongoing management for acquisitions and divestures.
  • Developed a future pricing methodology to predict the costs of new shipping lanes.

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