Uncover savings with benchmarks
Author: Michael Peiffer, Senior Logistic Consultant at Kloepfel Consulting
Why is a potential analysis of freight costs important?
As part of the potential analysis, we provide the customer with a neutral compass. By means of periodic and objective benchmarks, we show them their savings potential in concrete terms. The aim is to provide the customer with clear guidance, enabling them to make informed decisions regarding possible optimizations and savings in the area of freight costs.
What savings are possible?
On average, the projects achieve savings of around 15.1%. The results vary depending on the sector, with the savings in road transport roughly corresponding to this average. In the volatile sea freight sector, savings can also exceed 20%.
What does it mean that we reduce freight costs on a performance basis?
Companies only pay us a fee when actual freight cost savings are achieved. This model gives us confidence in the effectiveness of the measures derived from the potential analysis. Our conservative, realistic analysis results are even exceeded in many projects.
When should a freight cost potential analysis be carried out?
A freight cost potential analysis should be carried out as early as possible. The sooner potential is identified, the sooner it can be leveraged. This is particularly relevant in the classic general cargo sector, which can be found in almost every company. Annual contracts are often concluded here, which means that early savings over a period of one year lead to financial benefits.
How is the data collected for the analysis?
We take a lean approach to collecting the necessary data. We primarily communicate with those responsible within the business unit to be analyzed. This usually includes the purchasing manager and / or the logistics manager. It is important to point out that confidentiality is maintained through non-disclosure agreements (NDAs). This means that we do not exchange any information with suppliers without the customer’s consent. The data collected includes classic information such as tariffs, sample invoices and a list of vendors. This process is deliberately designed to be efficient in order to enable quick and effective analysis and to protect the customer’s capacities.
How long does such a potential analysis take?
The first step is to collect data on the areas to be analyzed. Sometimes the required data can be obtained within a few hours. In other cases, it can take a few days, especially if the requests are complex or if the customer has initially provided incomplete data that needs to be updated or completed. We generally allow about a week for data collection, especially for larger projects. Including the time for analysis and recommendations for action, the entire process can take around two to three weeks, depending on the availability of those involved and the data.
What specific tools does Kloepfel Consulting use to identify savings?
The collection of data for the potential analysis is carried out in close cooperation with the companies, considering the specifications and needs of the respective project. We use specific tools to carry out a reliable analysis.
On the one hand, we use the TI Contract tendering tool from Transporeon. This tendering tool enables an immense range in the tendering of transportation services. This allows us to obtain many offers in a short time and draw benchmarks for the potential analysis.
In the sea and air freight sector, we use a cost-intensive external benchmark tool called Xeneta. This tool is specially designed for these modes of transport. Its specialization and timeliness in the volatile transport environment make it a valuable instrument for identifying potential savings. It enables us to draw precise benchmarks for the same period. Customers benefit from the benchmarks generated by this tool without having to bear the high costs themselves.
While we purchase long-term rates with an average validity of one year in the road and CEP sector, we use Xeneta to look at short-term price benchmarks for sea and air freight due to the volatile market.
We also benefit from our extensive data pool, which is fed by the experience of around 50 projects a year. This data pool enables us to create current and relevant benchmarks for road, sea and air freight as well as for courier express parcel services.
The timeliness and scope of the data are crucial for identifying relevant and reliable savings potential.
How is communication and collaboration with clients organized during the analysis phase?
Communication and collaboration with companies during the analysis is closely coordinated and completely transparent. As a rule, the collaboration is very cooperative and constructive, as everyone involved benefits from the analysis. We always try to make the best possible use of the customer’s capacities during the analyses.
How are the results of the potential analysis presented, and how detailed and reliable are they?
The results of the potential analysis are presented in a very detailed PowerPoint presentation. This presentation visually derives the figures and enables companies to understand exactly how the benchmarks were arrived at. The results are derived very precisely; for example, euros per kilometer are used as benchmarks for complete trucks and euros per pallet for general cargo. We take a fundamentally conservative but realistic approach.
What are the typical reactions on the customer’s side when the results are presented to them?
The typical reactions of customers to the results presented vary. Some customers confirm the results immediately because they match their own assumptions. The spectrum ranges from immediate acceptance and the desire to implement the recommended measures as quickly as possible to critical questions, which is also important.
Ultimately, we are able to pick up all those involved, as we explain objective benchmarks and derive suitable measures in a comprehensible manner. In this way, we not only identify potential savings, but also motivate everyone to leverage them.
What steps does Kloepfel Consulting recommend companies take after the analysis to implement the results?
After the analysis, we recommend that clients go into the project in order to realize the identified savings potential. We usually work in a success-oriented manner. These recommendations are implemented through close cooperation in the various phases of the project, including tenders and negotiations with service providers. We also use the potential analysis to show what we can do and how we work, thereby gaining the client’s trust.
How is the success of the project secured in the long term?
We ensure the long-term success of the project by working closely with the company over a period of usually two years in order to make continuous adjustments and optimizations. This includes reacting to market changes, readjusting in the event of any problems with service providers and carrying out new tenders after one year. This continuous support and the performance-based model, in which Kloepfel Consulting participates in the savings, ensures that the improvements and savings achieved are sustainable in the long term.
There is also a transfer of know-how, for example by providing customers with our standardized tender documents and introducing processes that enable them to achieve sustainable savings on their own.
Author:
Contact:
Kloepfel Group
Christopher Willson
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com