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Manufacturing Supply Chain

NEEDS-BASED RESULTS

 

Manufacturing Supply Chain

SITUATION

Bus manufacturer required significant reduction in inbound transportation costs from third-party supplier.

DRIVER GOAL

  • Reduce the third-party inbound transportation spend by 16% (by $1.8 million per year from the total spend of approximately $11 million).

RESULT

  • Exceeded the Driver Goal by 50%.
case study image, CS-310 large

Case Study

Implement Best Practices to Reduce Transportation Costs

Issue

A manufacturer of buses for public transportation, with plants in the United States and Canada and a third-party company that performs the inbound transportation for the majority of its assembly parts, believed there was significant opportunity to reduce inbound transportation costs, increase control over the inbound supply chain, and increase service level by reducing the cycle time from supplier to manufacturing facility. These actions would enable a reduction in inventory from 8.5 days of supply to 5.5 days of inventory stock.

Highland Approach

The team verified the Driver Goal and identified the barriers that needed to be overcome to achieve it. Some of barriers the team identified and targeted for correction action included:

  • A long-standing relationship with the third-party supplier, who worked diligently to make sure the client got all their parts, was reactive – not proactive – thereby driving costs up.
  • A lack of policy rules allowed suppliers to ship when and how often they wanted without penalty, and a lack of readily available data hampered the ability to plan the inbound transportation network.
  • Lack of visibility and planning led to poor utilization of the external fleet. Portals were not being utilized by the suppliers to schedule their pick-ups.
  • The Transportation organization concentrated on auditing invoices and other non-value-added activities versus transportation analysis and management.

Actions Taken

  • Obtained data from the third-party vendor, sanitized and analyzed it, and formatted the modes of shipping into various categories, which included Regional Routes, Over-The-Road pick-ups, Single Source/Intermodal and LTL and UPS. Determined the baseline costs, practices, truck utilization, routines and routes for each mode.
  • Identified, through creative analysis and the application of best practices, the practices and routines necessary to achieve the Driver Goal. This was done for each mode across all three locations.
  • Developed business rules that detailed the practices and changes that must occur within the company, the suppliers and the third-party transportation company. Developed an operational flow chart that details the data necessary, both input and output, to be entered into the portal to give all involved visibility for planning and the data necessary to plan.
  • Developed a financial operating report.

Reduced inbound transportation spend by

24%

by implementing detailed business rules

Related Information

subject matter-based

Head of Organizational Development

Don is an internationally recognized organizational change and development expert with 33 years of global experience in partnering with results-oriented clients to achieve sustainable behavioral change and targeted bottom-line results in productivity, quality and profitability. He is recognized for fostering high levels of enterprise-wide sustainable performance improvement ownership. Don’s key strengths include his ability to engage stakeholders at all levels, create collaborative environments and work within the culture to achieve leadership, management and employee breakthrough results.

Client Partner

Financial Services, Marketing & Consumer Products

Petrina is a creative, hands-on executive with over 25 years of international business experience with a proven track record of working collaboratively across traditional boundaries and solving complex operational issues. She previously served at the senior executive level of one of North America’s leading financial institutions and several global consulting organizations. There, she led engagements serving industry-leading clients in United States, Canada, England, Germany, Austria, Switzerland, Norway and the Netherlands.

Project Leader

Manufacturing & Industrial

Joseph is a senior executive with more than 40 years of international industry management and consulting experience, primarily in the areas of process improvement, working capital optimization and operational metrics. Having served in more than 21 countries around Latin America, the Caribbean, the Pacific Rim, and North America, Joseph is skilled at implementing successful and sustainable change programs in culturally diverse environments.

Presenting Analyst

John is a Senior Executive and Presenting Analyst at The Highland Group with more than 30 years of leadership experience in management consulting. He has led hundreds of global consulting engagements that delivered an array of operational improvement solutions with total client benefits exceeding $1 billion dollars.

Project Leader

Sales, Marketing & Consumer Products

North America

Bill is a senior project leader with more than 20 years of hands-on experience in assisting multinational companies by deploying his expertise in Lean Six Sigma and Business Process Management tools, tactics and strategies. He has deep expertise in sales and marketing improvement, supply chain optimization, fixed-cost reduction, channel management, total production management, balanced scorecards and post-merger integration.