A.P. Moller – Maersk’s (Maersk) customer is a leading home improvement retailer in the U.S. The US retailer currently have a staff of more than 340,000 and operate over 2,000 stores in all 50 US states, the District of Columbia, eight Canadian provinces and Mexico.
Their goal was to reduce supply chain costs and facilitate growth in their import volumes. The roadblock to this was a high ratio (17.4%) of 20-foot light box utilisation. The current situation led to higher supply chain costs at unit level and operational challenges at 3 levels:
- Less flexibility on purchase order (PO) cutting for small volume orders,
- Increased use of 20-foot containers by individual carriers, leading to space constraints, and
- Reduced efficiency due to the number of containers loaded and unloaded at origin vendor and destination distribution centres.
Maersk's logistics solution
Based on Maersk’s internal feasibility study, they arrived at the solution of reduction of the 20-foot container
Based on Maersk’s internal feasibility study, they arrived at the solution of reduction of the 20-foot container. This plan was initiated by the origin client development team in China. They projected an annual logistics cost saving of USD 4 million, with this proposal.
A.P. Moller - Maersk started by evaluating the possibility of combining 2x20-foot containers. In order to achieve this, they consolidated all feasible 20-foot containers, according to the PO information and facilitated weekly communication with the vendors. In case the vendor was unable to consolidate by themselves, it was delivered to their Container Freight Station (CFS) facility for multi-vendor consolidation in close arrival windows.
Well-planned, branch-by-branch schedule
Maerk’s operations team rolled out the project, after a two-month trial run of their proposed logistics process. The roll out was successful, thanks to a well-planned, branch-by-branch schedule. Till date, the project has been running smoothly during every branch peak season.
The customer has executed the same 20-foot reduction programme among its other ten Chinese origins. More than 60% of planned 20-foot containers have been successfully converted into 40-foot containers and over 70% of these conversions were consolidated in the CFS facilities.
Cost savings for customer
Successful implementation of this programme generated total savings of around USD 2.2 million for the home improvement retailer. The result of this project played a crucial role in the renewal of the customer’s 3-year contract with us.
