International Logistics Co: Using Process Transformation to deliver on a contract win


KStar Associates helps an International Logistics company improve its operations through process transformation.

The unique approach of connecting Lean Six Sigma business process interventions and behavioral change to drive results has proven to be very powerful, and helped secure delivery on a multi-million pound contract-win while sharpening the client’s competitive edge.

This leading logistics provider delivers a wide range of services—including warehousing, packing, delivery, and freight forwarding —in more than 23 countries.

BUSINESS CHALLENGE

Reliable operations management is crucial for virtually all companies, and especially for logistics and warehouse businesses. Processes needs to enable efficient 24/7 service management, and be innovative to help companies stay ahead of competitors.

The client’s distribution centre —with more than 32 full-time equivalent employees and warehouse capacity exceeding 500,000 square feet in size —was locked in fire-fighting mode preparing to deal with 5,000 new service requests occurring across multiple channels each week. The surge in demand followed a significant contract win with a major electronics retailer. One-fourth of projected service demand could not be met at contractual service levels during customer pilots which risked the contract. Remaining on high alert day after day increased stress, reduced morale; and deprived management of time to focus on higher-value customer preferences and longer-term business objectives.

The operations group needed to adjust its distribution centre processes to deal with mulit-channel requests - orders deriving from online, store, contact centre channels which each had different service level agreements. The client turned to external consultants to rapidly address its operational issues. Possessing extensive experience in operational excellence, KStar Associates helped optimise Operational Processes and coach distribution centre staff to gain stronger control of their business against contractual requirements.

HOW WE HELPED

KStar Associates began work in early 2010, collaborating with client leaders to establish an organisational vision for delivery as a multi-channel logistics provider. A risk-sharing agreement linked progress in specific areas, thereby providing incentives for both organizations to work together for optimal results.

The long-term vision that emerged from high-level planning was succinct: become best in class. Six mission objectives—secure operations delivery against customer SLAs, working faultlessly, partnering reliably, acting proactively, providing easy and predictable services and improving continuously—supported the vision. Each mission objective led to specific strategies and performance measures.

Program leaders approved a transformation program flowing through three major work streams:

  • Business process management. KStar Associates emphasised listening to the “voice of the customer” to understand what customers truly valued and how that knowledge would help the organization focus on improvements for increased performance.
  • Operational improvements. 3 Key distribution/process chains began implementing improvement plans, addressing the high number of service requests and customer satisfaction issues in specific areas  covering retail, online, contact centre.
  • Data Reporting. The “data reporting” work stream combined operational management, improvement plans and change programs into a single reporting suite to measure performance.

Combining these work streams produced a culture focused on operational excellence and continuous improvement.

VALUE BASED OUTCOMES

KStar Associates guided the client on a transformational journey that is improving service delivery to customers while controlling costs and improving service. More effective and efficient operational processes achieved savings of roughly £1 million in 2010, with more savings to come. The unique approach of connecting Lean Six Sigma interventions and behavioral change to drive business results has proven to be very powerful.

Concurrent with cost control, the distribution centre has earned progressively higher marks in quality, as demonstrated by improved metrics for service-level agreements. Within six months (some examples):

  • The number of transactions handled through the distribution centre increased 36%.
  • Multi-channel service requests were processed within 12hrs from 48hrs.
  • Improved processes helped distribution picking achieve a sharp decline in time to pick items, from 190.6 seconds to 120 seconds.

If you are interested in discussing how KStar Associates can help your organisation through process optimisation, please feel free to submit a confidential Request For Proposal by Contacting Us.