Facing a fluctuating market and landscape of margin pressure, a large UK-based global footwear manufacturer decided to conduct a deep analysis of its inbound sea freight operations to discover if it was driving value for money from its supply chain.
The company also wanted to ensure that they were fully exploiting the advantages of a positive brand reputation in the supplier marketplace.
Multi-million pound contracts for shippers with capability on key routes from the Far East, South East Asia, India and Brazil had been negotiated on a regular basis by the logistics team. The procurement team had provided tactical support, but they wanted to engage more fully in the strategic sourcing process.
ADR Sourcing was asked to carry out a major review by the procurement team to benchmark potential value improvements and recommend options for changes to the sourcing strategy.
Using a range of techniques including portfolio analysis, relationship mapping, supply market research and cost benchmarking, ADR Sourcing prepared a detailed report which recommended:
· Urgently mounting a full RFQ exercise to assess alternative supplier opportunities and provide a platform for future negotiations
· Challenging how the supply chain was engaged and considering using freight forwarding companies instead of or as well as shipping lines
· Taking advantage of the company’s excellent reputation to consolidate its supply base, either with current carriers, new carriers, freight forwarders or a combination of these
· Negotiating new contracts with suppliers to take advantage of prevailing low prices which were forecast to rise
ADR Sourcing’s research showed that the company was still enjoying a buyer’s market but that this was not likely to continue for long.
After being submitted to senior management, the report was accepted in full and the company’s procurement team was given the go-ahead to put all its recommendations into action.
The company’s category manager for supply chain said: “The expertise provided by ADR Sourcing enabled us to develop a strategic framework for our container shipment buy with both short- and longer-term targets.
“Working with ADR Sourcing has given us a firm foundation on which to build future success.”
Supply market analysis and benchmarking
Comprehensive strategic sourcing review undertaken