Supply chains are inherently asset intensive (either your assets or the supplier's assets). Laying down assets constrains flexibility and increases risk in an uncertain world. PA recognises the need to manage in-bound and out-bound logistics to deliver a cost effective infrastructure that engages third parties where appropriate, configures operations around core competencies and drives down logistics costs whilst delivering exemplary customer service.
Case studies
European manufacturer of edible oils, fats, and sauces - Logistics strategy
The company served its French market via a mix of ex-Belgium direct deliveries using in-house transport and ex-stock delivery from a Paris location using sub-contractors. The company’s customer service deteriorated following the acquisition of a French edible fats producer.
PA recommended and implemented a revised logistics strategy based on a combination of increased direct deliveries ex-Belgium and an outsourced secondary distribution network. Other changes included reduced rates for northern France based on existing Belgian rates, a revised logistics operation, and cross docking in southern France. Distribution cost savings in excess of 15% were achieved while delivering increased customer service.
Selfridges - Assessing central distribution strategy and selecting a logistics supplier
Having decided to outsource its warehousing, Selfridges required expert external support to confirm that the decision to outsource was correct, to verify that the tender process had been conducted thoroughly, review the selection of contractors and create a detailed mechanism for controlling costs in an 'open book' environment.
A key finding of PA's review was that the resources proposed by the bidders were set at high levels, due to over-conservative assumptions about productivity. Labour was one of the most significant costs in the contract, and by far the largest variable cost open to negotiation.
PA therefore built a spreadsheet labour model with sufficient detail to provide accurate outputs while making all key parameters and ratios clearly visible. This model allowed Selfridges and the preferred contractor to discuss and agree the labour requirements rationally and productively. The agreement will also help ensure that, as distribution volumes and requirements grow, there will be no disputes over costs and payments.
As a result, PA has helped Selfridges to put in place the distribution solution that will support its continued growth successfully.
Aegate - combatting pharmaceutical fraud
PA has recently set up a venture company, Aegate, which is testing a new solution to combat pharmaceutical counterfeiting and fraud. It works by providing an information/database service that tracks a unique identifier (such as an RFID tag or a simple barcode) that has been added to the product packaging, from the point of manufacture through to the point of dispensing (pharmacy).
West Mercia Supplies (WMS) - Evaluating future options and effecting change to satisfy four public sector owners
WMS is a UK purchasing and distribution operation jointly owned by Shropshire County Council, The Borough of Telford and Wrekin, Herefordshire Council and Worcester County Council. WMS was established in 1987, based on the staff and assets of the Shropshire County Council supplies organisation, as a general procurement service, utilities procurement consortium and an educational and office supplies distributor. Each authority makes use of WMS procurement services and purchases utilities and office supplies as required. However the majority of the business revolves around the provision of educational supplies to schools both within and outside the geographic boundaries of the four owning authorities.
The four owners variously regarded WMS as: a key service provider; centre of excellence; local public sector employer; and a valuable, potentially saleable asset. They commissioned an independent review of the business to evaluate options for the future, with the challenging brief that a single recommendation had to be made which would be in the best interests of all four authorities. In response to that brief, PA put together an assignment team consisting of purchasing, distribution and business strategy experts to review the WMS business in terms of financial viability, market competitiveness, operational effectiveness and customer satisfaction.
PA established and launched a business change process to take the business forward into its second decade as a public sector centre of excellence, delivering value to both its customers and its owners.
A follow-up visit one year on confirmed WMS as a vibrant and customer-focused operation. Key organisational change has been delivered together with all the financial targets required to meet the agreed outcomes.
