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| What it costs to manage the collaborative logistics: |
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| Subject of the research: |
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We were expected to write a strong compelling business case which promotes the acceptance of collaborative logistics solution providing efficient communication framework for internal branches and external intermediaries in road transportation. The business case was hitting the sales argument in terms of quantified savings from employee cost, communication and transportation cost in pre transportation, during transportation and post transportation process.
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| Issues involved in the research: |
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Collaborative logistics has been spoken louder than the actual level of implementation. Not many of the logistics companies has been able to achieve the true collaboration among their internal and external partners. There was no facts and figures available in terms of the quantification of the savings.
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| Research and domain expertise requirement: |
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WE conducted primary interviews with 19 LSPs, and an online survey to which 98 small (less than €100 million), medium (€100-1,000 million) and large (more than €1 billion) LSPs responded. Based on the survey, we have consolidated and ranked the key challenges, potential savings, and desired features in CL solutions.
According to the information collected, we have prepared a feasibility study for implementation of CL solutions, and calculated the total savings by estimating the value created through various elements of potential saving mainly in employee, transportation and communication costs.
Costs have been calculated based on the assumptions of time required to handle tasks such as communication, reconciliation and data entry during order/shipment transportation request being created, sent, confirmed, and cancelled. We have identified three transportation stages: pre-, during- and post-transportation. We have taken the weighted average of the frequency of orders being changed or cancelled, shipments being delayed during pick up and delivery, and loss of customers due to late deliveries. This has been further quantified by multiplying the individual cost centres by the total value created. The total savings that can be made in the European logistics industry, if a collaborative logistics solution has been implemented, are estimated per shipment and then mapped to the total European logistics industry. We have assumed that the total savings have a linear relationship to the number and value of the shipments.
The savings were calculated for pre-transportation, during transportation and post transportation by effectively adding up savings in the labour cost, communication cost, transportation cost and admin cost.
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| Success factor- delivering value: |
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The white paper was marketed strongly by our research partner to over 44,000 senior executives in logistics generating stronger leads for the client.
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