Pressure on business performance due to high costs and inflation has been showing on companies in recent years. Profit expectations for firms in the United States have fallen sharply to their lowest levels since late 2016, influenced by lower consumer spending and ongoing global trade difficulties.
This has pushed businesses to find new ways to improve bottom-line numbers and better align their supply chains. The customer is a leading retailer in the US, dealing primarily in high-end furnishings and kitchenware. The company has a wide array of domestic operations along with multiple operations overseas.
The challenge
The company had several touchpoints in the cargo’s journey and problems due to sub-optimal consolidation
In an increasingly competitive domestic market, Maersk's customers continued to face difficulties in improving the productivity of their logistics process.
The company had several touchpoints in the cargo’s journey and problems emerged due to sub-optimal consolidation. This led to higher transportation and warehousing costs as well as an increase in transit times.
Their main challenges included:
- Developing an integrated supply chain management solution for their inbound supply to achieve cost savings.
- Finding the right decision tree that could forecast the cargo mix for consolidation at the origin.
- Streamlining inbound logistics operations to better fit delivery schedules and reducing touchpoints when necessary.
Origin-based process
Maersk’s regional team of experts worked in close cooperation with the customer to evaluate their current and optimal supply routes. This was done to improve utilisation and reduce its container count.
Maersk designed a solution to track the deviations at all key touchpoints and determine the right cargo ratio
The evaluation provided the vendors and Maersk with a guideline to optimise routing for shipment, centered on analysing the minimum used at origin facilities. The solution was to transform a destination-based method into an origin-based process. Through a cyclical review of the supply chain, Maersk designed a solution to track the deviations at all key touchpoints and determine the right cargo ratio for all inbound cargo flows.
The key areas the solution focused on were:
- Finding the correct levels of the minimum threshold of cargo at container freight stations at the origin.
- Determining the amount of cargo produced at the vendor and aligning delivery schedules from the origin.
- Determining separate packaging and logistics strategies for direct shipping and shipping through distribution centres.
- Historical analysis of cargo shippers with regards to deviations in delivery times, allowing Maersk to predict future patterns.
Results
- More than US$2.5 million in saving
- 1000 fewer containers used
As a direct result of the Maersk supply chain management tool, the retailer saw significant reductions in logistics and handling costs. The solution also enhanced order and supplier management processes to allow more accurate planning and faster shipping.
The customer’s benefits were:
- More than US$2.5 million in overall savings.
- Better packaging at the origin led to the use of around 1000 fewer containers.
- Reductions in overall customs entries with a faster clearance process.
- Efficiencies in transit times from origin to destination.
- Opportunity to drive better control through direct shipping in selected provinces.