Logistics Optimisation: Streamlining Operations for Efficiency

At a Glance

A prominent logistics provider in the Philippines, having experienced substantial growth and expanded its service portfolio to become the country’s largest and most comprehensive supply chain service supplier, recognised it had not yet reached its full operational and profitability potential. Facing challenges such as business unit silos, duplicated services, a misaligned organisational structure, and inefficient management control systems, the client partnered with Renoir Consulting to conduct a group-wide assessment. The ensuing 40-week project implemented significant changes across organisational design, commercial strategy, planning, scheduling, and operational execution, driving logistics optimisation.

Key Results 

• Optimised manpower plan for 2016, leading to manpower planning savings and cost avoidances of over $4.3 million.

• Increased fleet fuel efficiency, generating $1.65 million in annualized savings.

• Implementation of robust overarching management control systems across all core business units. 

Background 

Based in Manila, Philippines, the client stands as the largest and premier logistics provider in the nation. The group operates successful brands across various sectors, including travel, freight, express, and logistics. It also maintains joint ventures with well-known global supply chain companies. Driven by a desire to enhance service continuity across its brands and provide integrated end-to-end supply chain solutions, the client engaged Renoir Consulting to identify group-wide opportunities for process, system, and organisational structure efficiencies. This initiative aimed to achieve greater operational excellence logistics across the organisation.

The Challenge 

Despite significant growth in its service offerings and revenue, the client understood it was operating below its potential. Analysis revealed several key challenges hindering optimal performance. Business unit silos had led to inter-group competition, overlapping services, and a duplication of assets. The existing organisational structure was not effectively aligned with the group’s strategic direction. Furthermore, shared services were not leveraged efficiently, resulting in non-standard financial reporting, multiple IT systems, and low productivity. Manpower planning lacked a systematic approach to balance resources with work requirements, and insufficient monitoring tools contributed to headcount growth outpacing revenue increases.

The ‘go to market’ strategy for end-to-end solutions lacked clarity in definition and roles, and the sales force lacked comprehensive knowledge of the entire service portfolio. Limited visibility of the group customer base and a lack of a single point of contact for customers requiring multiple services also posed challenges. Internally, intra-business unit KPIs and SLAs were lacking, and operational and financial performance reviews were often unstructured and ad hoc. Poor visibility of account profitability hindered focus and effective cost and margin management, while KPI definition and review processes were inconsistent across units, impacting operational performance transparency. These factors collectively hindered supply chain efficiency.

What We Did

To address these challenges and achieve operational excellence logistics, a comprehensive 40-week project was initiated. This involved a dedicated 16-person taskforce from the client, guided by 4 full-time Renoir consultants. Three Management Action Teams (MATs) were formed to oversee improvement development and implementation across critical workstreams: Organisational Design, Commercial, Planning and Scheduling, and Operations and Execution. 

1. A steering committee, comprising senior group leaders, MAT leaders, and Renoir management, was established to review progress through bi-weekly meetings. 
2. To foster buy-in and ownership, brainstorming and feedback sessions were conducted throughout the design and implementation phases, ensuring that employees had the opportunity to contribute their ideas and concerns. 
3. The Organisational Design team reviewed the entire group structure for strategic alignment, management span of control, role and service duplication, and productivity.
4. The Commercial, Planning and Scheduling team focused on designing processes and management systems for a newly formed unit dedicated to end-to-end supply chain solutions (SCS), including a structured sales approach and pipeline management tools. They also targeted opportunities to eliminate wasteful sales concessions and implement account profitability tools. 
5. The Operations and Execution team concentrated on designing and implementing overarching management control systems and rationalising business unit and group KPIs. This included implementing standardised management reports, structured weekly operations performance reviews, redefined KPIs, effective review meeting behaviours, and Root Cause Analysis. 

The Results 

The project yielded significant positive impacts across the client’s operations, driving substantial logistics optimisation. The Organisational Design workstream led to a new front-end group setup to design and sell robust end-to-end supply chain solutions (SCS). Additionally, finance, accounting, and IT functions were migrated to a central shared services centre, enhancing efficiency and standardisation. The design of SCS and the shared services centre, coupled with a manpower planning rationalisation program, resulted in an optimised manpower plan that was projected to deliver over $4.3 million in annual manpower planning savings and efficiencies. The Operations and Execution team’s efforts significantly improved fleet fuel efficiency, generating over $1.5 million in annualised benefits.

The implementation of standardised management reports and structured performance reviews enhanced visibility into operational performance.

“We can now identify for the first time, exactly which branch is behind the 15-day cycle time target and take the necessary corrective actions.”
SVP Freight Business and Operations & Execution MAT Leader

The project successfully established a more robust overarching management control system, addressing the previous ad hoc nature of performance reviews. Improved visibility of account profitability and the rationalisation of KPIs provided a clearer understanding of operational performance and facilitated better cost and margin management.