Transport modelling

Summary

Over the last few years our client had seen more competitors entering the market offering lower prices with an inferior service. Our client made its prices more competitive over time to retain market share, but left the service unchanged to satisfy customers. During a RAPIScan® project, LCP recommended reviewing their transport management because there were major cost savings opportunities. A follow-on project was launched to model the transport operations as they operated and develop ‘what if’ scenarios. LCP deployed a well known routing and scheduling package to show the efficiency improvements in various scenarios.

Project Background

Our client, one of the world’s leading pharmaceutical companies, was experiencing a significant increase in competition, particularly in the UK. The new competitors offered a similar product at a lower price to the customer by saving on customer service. To maintain customer satisfaction, our client did not reduce service; but needed to reduce costs because the customers receiving the service were not the ones choosing the supplier. The management wanted to reduce costs to gain back more profitability, without having a major impact upon customer service and satisfaction.

LCP applied its RAPIScan® methodology with a focus on supply chain analysis and diagnostics, high level supply chain mapping and cost-to-serve®. As an outcome of this project, LCP recommended to the client to review their transport management. Our client launched a project and asked LCP to model the transport operations as they operated and various ‘what if’ scenarios to demonstrate new ways of operating and to recommend a way forward.

LCP deployed a well-known routing and scheduling package to show efficiency scenarios and to cost improvements to the operations.

Approach

To undertake this project LCP defined 3 streams of work:

1. Data validation to agree on the datasets used for modelling and setting the assumptions

2. Modelling of the transport operations as they currently operated and modelling of ‘what if’ scenarios

3. Development of recommendations and a route map of the changes required

The project identified considerable savings through changing fleet utilisation and restructuring the delivery arrangements. LCP recommended a number of steps for achieving this goal. Throughout this project we worked together with the transport manager and other key managers from the client’s team to review findings and develop ideas.

Client Testimonials

As a result of this piece of work LCP has been asked to support the process of selecting a suitable vehicle routing and scheduling system.

Success Factors

In a short space of time this project modelled the cost implications of serving the customer base and identified some major savings by some simple steps which need to be undertaken. LCP was asked to support the client in undertaking these steps in a follow-on project.

Results and Benefits

A number of improvement opportunities were identified and quantified as part of this project, these included:

- Major opportunity to reduce transportation cost through active management and system supported route planning by ~10%

- Additional administration savings when introducing a routing package

- An opportunity to take out complexity in transport management