Delivering fresh produce into regional Australia can be a complicated task. Consumers demand regular, frequent deliveries, putting pressure on service costs and profitability. Looking to overcome these challenges, a global company offering fresh produce delivery contacted Market Motion to investigate how they could become more efficient and increase the profitability of their transport network.
The Challenge
Consisting of a 7-day schedule with 42 depots across the regional areas of Southern Queensland and North Coast New South Wales, the existing transport arrangements relied upon a subsidised franchisee network and costly third-party logistics providers.
With an increase in third-party transport costs and pressure to reduce the price of items on the shelf, thanks to competitive changes, the business needed to cut costs where possible.
The heavily-subsidised franchisees were barely turning a profit, making the arrangement unsustainable from both ends.
The Solution
Using Omnitracs Roadnet®, and Omnitracs Territory Planner® simulation technology, Market Motion undertook evaluation of the existing transport network; analysing travel time, fatigue breaks and service time.
Detailed consultation with key stakeholders was held to re-work the transport networks. Options discussed included closure of some depots and modification of replenishment frequencies (without compromising on quality and freshness of the produce).
The technologies allowed the business to benchmark their transport costs and to model and re-plan a more efficient and effective transport network.
Primary and secondary delivery runs were identified and implemented. This reduced overall costs and improved profitability for franchisees.
The Results
26% reduction in supply chain costs.
31% reduction in third-party logistics transport costs.
Closure of 11 regional depots (26% of total depots) resulting in significant savings.
Overall improvement in the profitability of New South Wales and Queensland franchisees and a reduction in business subsidies.
Additional strategic improvements also identified for action in the future.
