Eliminates pass-through delivery costs, adds profit source;
Improves ability to meet seasonal demand
Strategic Intent
Capture gross margin from a pass-through revenue stream; Improve customer service by improving ability to meet seasonal demand with development of a stand-alone logistics management company
Situation
- North America’s largest construction aggregates producer
- 300 production facilities in the United States and Mexico
- Product delivery handled by vendor truckers
- Transport costs passed along to customers
- Revenue diminished by delivery system
- System contributes to customer service problems in meeting seasonal demand
Issues and Barriers
- Management lacks strong business case and detailed implementation plan to support the vision.
- Current software system is inadequate to handle the functions of newly proposed logistics company.
- Efforts to acquire external truckers are unsuccessful and business model is changed to support building the capability internally.
Key Implementations
- Develop business plan for creation of stand-alone logistics company capable of meeting all management objectives
- Detailed implementation plan that addresses all barriers and obstacles to success
- Hire, orient and train all members of the new logistics organization
- Manage implementation of new software system designed to support logistics company
- Improve logistics effectiveness by utilizing GPS
- Design and implement fleet management system
Results
New company improves customer satisfaction to the extent that client is able to increase market share and overall revenues. The establishment of the new logistics company:
- Generated 5% point increase in gross margin in just four months
- Eliminated 100% of pass-through delivery costs, adding a new source of profit
- Broke even after six months and was projected to show a 3% profit one year later
Client Perspective
Brooks did an excellent job directing and assisting us in establishing a new business unit that is structured for success. I was very pleased with the quality of the team, the way in which they worked with our organization and the results of this effort overall.
—Division President
