Planning can optimise costs and efficiency

The Background

A multi-channel speciality lifestyle retailer was growing into one of the largest e-commerce retailers in the US. They had more than 50% of total revenue streaming through their online channels. As operations scaled up, the company needed to scale up its warehousing and distribution as well.

Planning can optimise costs and efficiency

The Challenge

This growing American lifestyle goods company was facing challenges in their current supply chain set up. Their vendor-load consolidation was sub-optimal, the service levels were unsatisfactory, and their transportation costs were increasing. Moreover, 20% of their containers were holding less than 7CBM of goods.

Planning can optimise costs and efficiency

The Solution

After an assessment of the supply chain set up, Maersk devised a planning solution which would analyse vendor shipments.

This plan applied bespoke algorithms to identify the minimum level of cargo per shipment to minimise the total number of containers used.

The solution implemented:

  • A consolidated guide to supply chain planners to help meet the agreed minimum levels of cargo via the development of a ‘decision tree’.
  • A host of rules that vendors could use to decide when to ship cargo directly to the final distribution centre, or to do the same to a transload facility.
  • A container freight station solution stationed at the origin where smaller cargos could now be consolidated easily with other freight.
Planning can optimise costs and efficiency

The Result

The solution transformed the supply chain set up of the company instantly. By minimising transload activities in the US from 20% to 5% of the volume, we were able save annual costs of US$ 2.4 million and lead-time by 1 day.

The solution also delivered:

  • Improved handling in the warehouses
  • Optimised flow of cargo at the point of destination
  • More clarity to vendors to make decisions on where and when to ship their cargo
  • Weekly reports that ensured that all processes are followed through effectively
  • Minimised storage requirements Speeded up access to back-orders

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