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Outsourced Distribution in the Chemical Industry

The client

£85 million specialist chemical producer
Highly competitive and cost sensitive marketplace
Supply Chain Cost Base eroding competitive position

The challenge

Little change in working practices for 10 years
No true knowledge of distribution costs
Piecemeal evolution of nominated hauliers
No measure of service; customers dissatisfied and moving to rival producers

The solution

Due to the conservative nature of the Client, the change process had to be seen to evolve from within their management team. We worked with them to extract and analyse cost data and then to build a model of their distribution profile which allowed the Client to evaluate a number of different cost and operational scenarios. Our knowledge of best practice, benchmark costs and performance levels was then integrated into the model to produce a prioritised list of viable alternative distribution strategies.

As a result, it was decided to outsource bulk distribution to a third party. The Consultancy Company managed the tendering process, using the model to provide like-for-like comparisons for each tender response. We used our in-depth knowledge of the industry to include only those third parties that had the capability and capacity to undertake the work effectively.

Once a haulier was selected, client staff were trained so as to effectively manage the relationship. We monitored performance for the first 3 months to ensure a seamless transition through the change process.

Benefits at a glance

  • 22% reduction in distribution cost
  • Ongoing continuous improvement processes established including a series of performance metrics
  • 30% improvement in bulk distribution performance
  • Recommendations made to rationalise packaged distribution and further reduce the cost base
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