With many economists making bleak predictions regarding the ongoing economic crisis, optimising spend is a priority for many businesses. This has led to increased pressure on numerous functions, including logistics and supply chain, to work with procurement to maximize efficiency and drive company growth. Despite this, there remain many who are unconvinced by procurement's ability to work with logistics and the actual benefits this collaboration can deliver.

1. “Can procurement really add value to logistics?"

2. “Procurement can add value to logistics”
Craig Bunker

3. Agenda
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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4. Agenda
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
4

5. Procurement can play a role in multiple models
Procurement capabilities such as tender specification, e-auctions, negotiation,
SLA’s and commercial agreements can deliver logistics functions huge savings
3PL and 4PL Operations
• RFP Specification and tendering
• Supporting negotiations
• Commercial structure
• Service Level Agreements
• Benchmarking
• Improved working capital
In House Operations
• Fleet / asset specification
• Whole life cost modelling
• E-Auctions and tenders
• Supporting negotiations
• Commercial structure
• Service Level Agreements
• Improved working capital
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6. Agenda
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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7. Will procurement affect logistics’ ability to deliver good service?
I have good
relationships with my Service is more
Procurement don’t suppliers – they important than price
listen to what I want always bend over – failed deliveries
backwards to give me cost more..
what I need
Service is more I don’t want one
important than price Procurement don’t national supplier –
– failed deliveries understand logistics they wont care about
cost more.. us.
Procurement Logistics
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8. Will procurement affect logistics’ ability to deliver good service?
Procurement Logistics
Business
Skills and Tools
Requirements
Joint Objectives
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9. Agenda
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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10. Understanding Savings Levers
Procurement can demonstrate a rigorous approach which has covered every
area of potential benefit
Future Optimisations
Acquisition Options Operational Options
Options
Capital Purchase Hire Fleet 10. Mileage Balance for 19. Ancillary Body Supply
R&M Fleet
ROI Modelling for R&M
1. Fixed Chassis Pricing 6. Evolution of Fleet Hire 20. Ancillary Refrigeration
Cash
2. Life-cycle Costing
Model
7. Disaggregation of
11. Fleet
Fleet 21.
Units
Ancillary Cameras
Flow
Review
CAPEX / OPEX
RISK
22. Ancillary Livery
Elements for Hire 12. Rebate for Early
3. Fleet Specification 23. Ancillary Fleetboard
Vehicles Termination of R&M
Review 24. Ancillary Tyres
Contracts
8. Spot Fleet Creation 25. Ancillary Windscreens
4. Euro 6 Cost Mitigation
13. Parts Discount / Labour
9. Ex-rental Transfer Rate Reductions 26. Ecofuel Trial
Opportunity
Working
5. Transparent Cost Matrix 27. MPG Component Trials
14. Managed Service Roll-
out
BALANCE
28. Driver Training Initiatives
Capital 15. VMU Expansion
SHEET
16. Breakage Opportunity
17. Ancillary Parts
Maintenance
18. Open Book Cost
Modelling
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11. Speaking the language of finance
Procurement can demonstrate a rigorous approach which has covered every
Fleet Structure
area of potential benefit
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12. Agenda
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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13. Examples where procurement has added real value to logistics
Fleet Whole Life Cost Modelling Sea Freight pricing
• Developed a whole life cost model for a • Benchmark RFP’s issued to challenge the
large fleet single supply situation
• Demonstrated the optimal life and • Alternative suppliers used to stimulate
financing options competition
• Created an internal ‘hire fleet’ of older • Savings negotiated through identification of
vehicles key cost components and negotiating on them
• Savings of >£1.5m per annum individually
• 4% saving achieved against a proposed 4%
increase
Vehicle Maintenance
• Project 1 – audited internal maintenance Trailer Purchasing
processes and costs vs third party • 11.3% savings against the best negotiated rate
outsourced maintenance. Results drove • 3.3 % from e-auction
savings of 10% within internal • 8% from post auction negotiations
workshops through efficiency
3PL Commercial Structuring
• Advised a major food manufacture on
their new 3PL contract.
• Implemented a bonus based on key
service and operational KPIs
• Bonus drove improved service levels of
1.8%
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