Client Description

Regional Supermarket Retailer

Background

The Retailer and Manufacturer agreed to evaluate Value Chain opportunities to reduce the COGs of key product lines through reductions in logistics and administrative costs from Manufacturer DC to Retailer DC.

Objectives

Reduce shared logistics costs between trading partners for critical retailer corporate categories and brands.

TPG Approach

• TPG conducted a thorough analysis of the value chain opportunities for a number of selected manufacturers and a common retailer within designated retailer grocery categories.
• TPG assessed COGs, logistics costs, transactional costs, and miscellaneous sources of waste between trading partners in the Corporate Brands department for selected categories.
• TPG developed a final list of Manufacturer’s projects based on incremental sales, profits, cash, and customer service benefits for the designated departmental value chain category.
• TPG coordinated the analysis and developed a pilot design to execute the improvements.
• Benefits and investment costs were tracked and summarized at the end of the pilot.

Impact/Results

• A pilot that tested the cost savings of shipping the majority of shipments via rail vs. truck was implemented.
• Damage / handling impacts of the shipment mode were negligible.
• Freight savings amounted to over $400k per year.
• The permanent mode change was implemented two months after the completion of the test pilot.