Freight Costs Optimisation for a Leading Player in the Tiles Industry

Building Materials Consulting

Client Challenge

The company, one of the top three in the tiles segment, witnessed rapid growth. Being a distribution led business, the transport costs had spiraled over the past few years and inefficiencies had crept in. The top management of the company aimed to optimise the transport costs, which would ultimately impact the bottom line directly. Hence, the top management asked for assistance in optimising import costs (imported from China), optimising outbound costs (primary distribution from warehouse to C and F locations), optimising Inbound costs (raw material transport to the factory) and reducing breakages and errors in transit.

Our Approach

To optimise freight costs, UC Strategy adopted the following methodology:

  • Optimising import costs
  • Alternate ocean carriers/Rate negotiations
  • Alternate routing through other ports
  • Alternate customs house agent (CHA)
  • Use of break bulk as opposed to containerised cargo
  • Optimising Outbound costs
  • Alternate transporters/Rate negotiations
  • Use of higher tonnage vehicles
  • Reduction in credit cycle
  • Use of Rail
  • Use of coastal shipping
  • Optimising Inbound costs
  • Alternate transporters/Rate negotiations
  • Use of higher tonnage vehicles
  • Identified cost optimisation strategies across
    • Imports – Alternate ocean carriers/ rate negotiations, alternate routing through other ports, alternate CHA and use of break bulk opposed to containerised cargo
    • Domestic distribution – Alternate transporters/rate negotiations, use of higher tonnage vehicles, reduction in credit cycle, use of rail and use of coastal shipping
  • Defined a process to reduce in-transit breakages
  • Defined loading, unloading process as well as checklist and auditing process to validate breakage claims

Our Impact

The engagement resulted in significant savings that impacted the bottom line by 15 percent (approximately Rs. 5 – 7 crores).

Leave a Reply

Your email address will not be published. Required fields are marked *