Logistics Outsourcing as a Cost and Quality Advantage

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Client Challenge

Our clients, the chairman of the management board and the managing director of administration and logistics of a retail consumer goods company with nearly 600 stores in Germany, faced the challenge of logistics processes that were not cost optimized and were underperforming.

As a subsidiary, the company was dependent on the logistics of the overall corporate group. However, the other companies in the group were much larger and in different industries than our clients’ company. As a result, the company was always an “appendage” and thus unable to function in line with the market.

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Mandat Intervention

With the management we developed a future-oriented logistics concept and carefully weighed the arguments for and against logistics outsourcing. In close dialogue with the group management and other stakeholders, the basic decision was taken in favor of logistics outsourcing.

As a basis for a call for tenders, Mandat assessed the respective process landscape in cooperation with the decision makers at our client company and the parent company. The requirements of the stores were crucial in this process. We analyzed the warehouse data and quantity structures and corrected them for obvious errors.

We prepared a call for tenders and sent it to a number of qualified logistics service providers. Based on the results of the tender procedure, we drew up a shortlist and jointly negotiated the basic services together with our clients until the decision for a logistics partner was made.

Once the basic decision for the most promising logistics partner had been made, we conducted the technical negotiations in numerous meetings with lawyers and experts on both sides. We worked out a contractual framework and guided the two partners to a mutually beneficial solution.

We assisted our client until start of operations of the new warehouse and the logistics alliance.

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Results

A joint venture between the retailer and the logistics service provider has been designed, implemented and is operationally successful.

The transition out of the parent company’s logistics operations took place smoothly and in a coordinated manner.

Total logistics costs have gradually fallen to around 4% of sales.

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