Here’s how a Leading 3pl Company saved on their Logistics Costs
Our client here is India’s leading 3PL solutions provider, which has a strong presence across the country and diverse industries. They are in the business of providing end-to-end logistics solutions in terms of transportation, distribution, warehousing, in-factory logistics & value-added services. They cover almost 1,00,000+ km/month to serve transportation requirements across India. These services mainly comprise inbound, outbound, primary & secondary distribution, network-based distribution, last-mile delivery, etc.
The company has built a network of warehouses across strategic locations in India and has developed strong surface transportation capabilities along with first and last-mile linkages. It also has a large network of over 1,450 business partners, who supply vehicles, warehouses, and other assets and services. Its asset-light business model enables it to serve over 300 domestic and multinational companies, including JSW, 3M, Bosch, Siemens, Thermax, Mercedes, and Volkswagen.
Locating the cost slippages
Cost-efficient transportation has a direct impact on the profitability of all logistics service providers. The expertise in handling the load, maintaining a delivery schedule, and ensuring impeccable service to the customers is the prerequisite for all successful 3PLs.
After analyzing the logistics scenario across its various business segments, our client realized they are predominantly losing out money to secondary transportation. That’s when they approached Elixia Tech to identify the best model to reduce the secondary logistics cost without any impact on the Service delivery timeline & DEPS (Departmental Entry processing System).
The team started analyzing their daily operations and realized that they are spending a lot of man-hours allocating the loads to vehicles, negotiating the rates, and finalizing the most optimal routes for all the planned deliveries.
There is no centralized system to store vendor rates, vehicle availability, planned deliveries, etc. Also, there is no well-defined algorithm to ensure a seamless allocation process. This resulted in a lot of mismanaged trips resulting in improper vehicle utilization, higher empty runs, and thus, higher transportation costs.
Our cost-saving tools & technologies
We at Elixia identified that one of their accounts was facing major difficulty in allocating & managing costs for their local and upcountry deliveries. This was largely due to improper vehicle allocation, transport vehicles running on incomplete capacities, and inefficient route planning and management.
We took up this location and start working on a plan to improvise the processes and reduce their secondary logistics costs. Data from the past 3 months was collected to get details like invoices, SKU weight, and Volume master. Geocoding was then done to segregate & analyze this data as per location, vehicle preference, and vehicle costing. All the deliveries/invoices were then fed into Elixia’s Optimization Engine, an efficient tool to optimize load, route & space for shipments & deliveries. The solutions work in the following steps:
As a result of the solution, we were clearly able to define actual costs and vehicle capacity requirements for both local & upcountry markets. Cost-effective allocation models were then suggested to make informed business decisions and thus, save on secondary logistics costs.
Statistically Significant Results
As a result of the solution, our client was able to clearly define the budgeted costs and dedicated vehicle capacity requirement to efficiently manage their secondary logistics process. Rs. 6.7 lac was saved in one month from optimizing load, space & route for both local & upcountry deliveries in 3 months.
We are now working with their team to implement Elixia Optimization Engine for their other plant locations pan India.