Outsourcing a key customer-facing process
The logic of outsourcing logistics: why the overhaul of its transportation strategy made sense for a powered access equipment group.
Headquartered in England, a multinational powered access equipment group depended on its own fleet of over 100 specialist loaders and trailers to transport its equipment to sites throughout the UK. While aware that the fleet also played an important role in representing the group’s brand to its customers, the group’s CEO was keen to find out if an outsourced solution could undertake the work more efficiently and cost-effectively. It had become clear to him that the operation of this in-house fleet required investment in a number of areas outside the company’s core competencies – such as training of drivers, vehicle servicing, maintenance, insurance, and licensing, as well as keeping abreast of current legislation.
However, there was some resistance to the idea of an outsourced solution, not least because of doubts that a third party was capable of representing the group equally well to its customers.
Aware of this resistance, and conscious that outsourcing transportation and logistics represented a major cultural shift for the group, Occumen, a procurement focussed management consultancy, was engaged and kick-started the evaluation of possible outsourced solutions by setting up a cross-functional team. Particularly important in the absence of an internal procurement team, this initiative was key to aligning internal stakeholders, and to furthering understanding of costs associated with the current business, as well as future requirements.
Our evaluation covered a range of criteria including cost, service levels, innovation and performance, the most important of which was cultural fit with a potential supplier since employees would need to be TUPE’d across. To ensure suppliers understood the business, an intensive and rigorous supplier selection process was rolled out following an RFP. It included site visits, client references, and week-long sessions with suppliers, culminating in meetings between the CEOs.
The rigorous and inclusive review process which Occumen recommended and helped manage was very effective in engaging all our internal stakeholders, and it enabled us to develop a successful and business-critical strategic partnership with our logistics supplier.
Chief Executive OfficerUK Powered Access Equipment Group
The resulting multi-year contract which we helped negotiate provided the business with certainty around costs and delivered savings in excess of 10%. Additional financial benefits accrued from the chosen outsourced solution since operating expenditure was reduced and capital expenditure removed. The supplier selected was also able to deliver technical improvements and efficiencies, and to monitor legislation effectively.
Performance measures established by Occumen created a focus around continuous improvement in order to generate incremental benefits over the life of the contract. These measures included metrics designed to track, and help maintain, quality of customer service at the point of delivery, in line with the group’s brand image.
The financial benefits this outsourced solution has delivered have been significant, all the while maintaining the quality of customer service on which the group prides itself. Key to both has been the prioritisation of cultural fit in selecting the right partner.
Rob AlexanderPartner, Occumen