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Intermodal Railroad

NEEDS-BASED RESULTS

 

Intermodal Railroad

SITUATION

Bi-modal rail operator needed to reduce costs while maintaining current service levels.

DRIVER GOAL

  • Reduce core operating expenses while maintaining service levels

RESULT

  • Reduced costs by $4.3 million.
  • Achieved $1.1 million improvement in loaded ratio.
  • Reduced SG&A expense by $1.2 million.
case study image, CS-223 large

Case Study

Reduce Operating Costs & Maximize Customer Service

Issue

This “bi-modal” transportation company—offering both over-the-road trucking and rail transportation services—was recognized in 2008 by Logistics Management Magazine as the transportation industry’s best “Rail/Intermodal Service Provider.” However, recessionary economics late in the year significantly squeezed its competitive market niche. The client planned to increase revenue (sales) opportunities but sought assistance from The Highland Group in reducing its internal cost structure.

Highland Approach

The Highland Group’s analytical professionals conducted a Discovery and Design process that identified and detailed the key cost drivers, the specific approach required to achieve the desired results and the projected benefits.

Actions Taken

  • Conducted executive workshops to critique different organizational models to optimize the order-to-billing process and decision making effectiveness.
  • Designed and implemented new sales and operations planning processes and tools to balance customer demand with operational capacity and capability.
  • Reengineered processes and implemented tools to manage the movement of empty equipment throughout the system and at customer locations.
  • Formalized processes to optimize repositioning costs by considering train movements, customer equipment pools, forecasted customer demand and historically predicted surges in customer requirements.
  • Formalized planning and dispatching processes to improve the utilization of dedicated tractor owner/operators and reduce the reliance on more costly, third-party contract services.
  • Implemented a System For Managing, which improved staff utilization and productivity in Customer Service and Dispatch.
  • Designed and implemented process improvements in Customer Service and Dispatch, including load balancing (minimizing demand spikes) and route scheduling (standardizing core elements of the daily/weekly plan).

Reduced core operating costs by

$4.3m

while maintaining service levels

Related Information

subject matter-based

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.