Spotlight on Success
KGM Strategy empowers clients to adapt to evolving transportation and logistics demands, ensuring alignment with economic shifts.
Global Strategic Sourcing Study
Logistics – Floor Covering Manufacturer
Key Results Overview
$ 0
MM+
in realized savings
40
%
Reduced carrier base
Defined clear metrics to evaluate external carrier performance
Simplified processes for load tendering, shipment tracking, invoicing, payment, and audit
Optimized national LTL program by leveraging regional providers, achieving >35% savings
Challenge
Escalating transportation costs driven by the demands of a service-focused customer base.
Evaluation
The KGM team conducted a comprehensive analysis of the client’s supply base and transportation costs. Key savings opportunities were identified, along with technical and organizational challenges affecting cost efficiency.
- Conducted interviews with cross-functional teams and gathered benchmarking data to assess costs.
- Identified potential collaborations with suppliers and railroads to enhance inbound raw material efficiency.
- Uncovered gaps in information availability, freight audits, payment procedures, and transportation management processes.
- Developed skill-based training programs, project plans, and timelines to achieve savings goals.
- Performed an end-to-end supply chain diagnostic to map the current state of the network.
Approach
To capitalize on cost-saving opportunities, KGM executed a strategic sourcing initiative targeting six key transportation categories, including truckload, LTL, intermodal, small package, rail, and drayage.
- Defined data requirements and outlined issues relevant to transportation provider negotiations.
- Restructured the transportation department and aligned roles with industry best practices.
- Provided negotiation training to client teams to ensure long-term sustainability.
- Challenged existing trailer specifications to expand the truckload supply base, unlocking additional savings.
- Utilized a CPLEX analysis tool to develop an optimal hub-and-spoke network model.
Results
Significant cost savings were achieved by optimizing the client’s carrier base and enhancing transportation management. The new organizational structure ensures sustained cost reductions and increased awareness of transportation issues among leadership.
- Realized over $22 million in savings.
- Reduced carrier base by 65%.
- Established clear metrics to evaluate external carrier performance.
- Simplified processes for load tendering, shipment tracking, invoicing, payment, and audit.
- Optimized the national LTL program by leveraging regional providers, achieving >35% savings.
- Network optimization yielded nearly $6 million in cost savings.
