Company Profile
Auckland based subsidiary of a global Cosmetics company.
The Situation
The Client had undertaken a full logistics review internally within the previous 12 months and had achieved some savings across very specific traffic lanes. The CFO was interested in exploring further alternatives and invited ERA to review their costs.
Specific challenges were that Expense Reduction Analysts (ERA) had to work within a prescribed set of global arrangements including preferred supplier arrangements as specified by the Client’s European Operations.
Our Approach
After conducting a full 12-month audit on the import airfreight costs and surcharges, ERA was able to confirm and benchmark the current costs. Excluding surcharges, the annual costs were confirmed to be around $368,000.
Detailed discussions were held with the Client in an attempt to optimise and rationalise their activities in this area, and the lack of any Service Level Agreement was also highlighted.
Comprehensive and very detailed RFP’s were then issued to the incumbent supplier as well as other quality suppliers which included very detailed capability statements.
The Results
After a full evaluation process, the Client elected to retain the incumbent supplier. Besides a huge improvement in the transparency of landed costs and reporting procedures, the Client now has the benefit of a formal and documented Service Level Agreement (SLA) to ‘lock down’ the quantifiable savings of 28.8% per annum that were achieved. During the course of the Project, ERA also identified several billing errors and overcharges and negotiated a refund from the supplier to compensate.
“We now better understand our cost drivers, we have full transparency of costs, we have a formalised SLA and we’ve saved in excess of $100,000 per annum as well."