UPSIDE Consulting successfully executes a global parcel freight tender with savings above 15%.

UPSIDE Consulting was leading a 3-months tendering process with the objective to reduce the parcel freight cost for one of its global customers.

The customer is shipping parcels between 0,5 and 50 kg from its 5 facilities in Europe, Asia and America to its customers around the world and between the facilities.

Problem: In the past the freight tariffs were on a yearly basis requested by each facility independently. Usually, the requests were sent to 1-2 historically used carriers. The new tariffs were then updated by the carriers’ regional salesmen/contact person considering only the limited volume from one corresponding location. The selection of a carrier was strongly driven by the historic service experience of a carrier in the destination country. Selection based on tariff was mostly the second criteria. For the flows between the customers locations usually the tariff of the shipping facility was used.

Objective: Group wide freight cost reduction while maintaining same service level.

Methodology used: Global consolidated freight tender for all locations. Optimization of intercompany flows based on lower tariff between origin and destination.

Approach: This year UPSIDE Consulting was requested to execute a formal global tender. Our approach was to create a consolidated tender for all facilities and including possible backflow tariffs between the group’s locations.

To start with, UPSIDE Consulting created a global tender document with all key information ready to share with potential carriers.

After scanning the market 5 carriers were selected and contacted with the request for quotation indicating an estimated distribution structure and the total freight volume of the past year.

The received quotes were included in the volume model and different scenarios were calculated in order to find the best mix between service, cost and flow direction.

After selecting the two most favourable carriers, a contact to a higher hierarchical level in the commercial organization of the carrier was established. We were able to reach out up to Continental Commercial Directors. Especially in the case of Europe a contact via LinkedIn gave us the chance to present the opportunity to the right decision taker. Hereby we explained the potential which our global customer is having for the carrier which was well understood. This provider’s commercial office in Europe collected then the global offer with substantial improved tariffs especially to and from Europe.

In the final assignment the above-mentioned provider received a major stake (around 80%) of the total global freight volume. The other provider received mainly the destinations with high service difference assigned.

Deliverable: New reduced tariffs from all customers locations to destinations. Matrix for intercompany flows with indication of the company which shall order the freight due to the more favourable tariff.

The global saving reached by this tender was above 15%.