Procurement
Europe’s largest ocean freight tender achieves savings of 30%
With a global strategy designed to leverage scale, volume and total company requirements and taking advantage of market conditions, the logistics team at H&Z achieved savings of over 30% and delivered full contracting of requirement to mitigate risk for our global manufacturing client.
Client Challenge
Our client had, for many years, managed its Ocean Freight commercials at a local/country level with individual plants procuring rates on an annual contracted basis or through spot rates to suit individual manufacturing sites. As part of a procurement cost reduction programme, H&Z proposed looking at the procurement of Ocean Freight at a strategic global level, leveraging scale, volume and total company requirements.
H&Z Approach
For delivery of a successful market engagement, it was key for H&Z to break the project into a number of key stages:
- Clearly define the scope of the tender, including geographical coverage, volume, and service level requirements,
- Identify and engage key internal stakeholders, including logistics, finance, and operational teams, to ensure alignment with organizational goals,
- Conduct a comprehensive risk assessment to identify potential challenges and develop mitigation strategies,
- Develop a detailed timeline outlining key milestones, from tender preparation to contract finalization and make sure this aligned with all key stakeholders,
- Exploration of incoterms transitions, from supplier-managed to self-managed,
- Conduct a detailed tender process, supplier selection and negotiation strategy that aligned with the client’s goals and objectives,
- Development of a logistics strategy to enhance the capability of the function and enable future savings.
Results
- 30% savings across regions for FCL (Full Container Loads) and LCL (Less than Container Load) meeting the needs of all the key business units and stakeholders,
- Risk mitigation, through full contracting across all selected providers,
- Established cross-continental collaboration between, business units, departments and key stakeholders,
- Framework for future global Ocean freight tenders in place,
- Logistics strategy enhancing overall performance of logistics function.