Then there were difficulties with its new, proprietary logistics center, which in addition to design errors such as functional spaces too small to fulfil their purposes, also had major problems with its organizational structure and processes. The result was that not all orders could be processed on the day received.
Barkawi Impact Story Special
Barkawi soon recognized that the company hadn't chosen the best co-loading partner for its needs. It turned out that the route overlap was only 0.14% – so the synergies with the partner were practically zero! What was more, both partners competed for the same time slots for delivery to the customer: 45% of the stops were between 7 and 10 a.m., while midday and the afternoon were virtually unused. This led to poor vehicle capacity utilization and even additional transport costs caused by the "set daily price per vehicle" concept, because additional vehicles had to be leased for the mornings. In addition to highlighting the drawbacks incurred by the choosing the wrong partner, Barkawi also succeeded in showing this client that co-loading was the right decision that can cut costs by more than 12% (trip costs) if you do it right.
The biggest lever for cutting the costs per stop were found in the time windows for delivery. Due to the tough competition, the logistics services requirements in the electrical wholesale business are very demanding: each customer was allowed to choose its "desired time window", irrespective of the value of its order, profit margin or strategic benefit to the company. So additional vehicles were put into the trip schedule, and routes changed, because even deliveries worth only € 10 had to be made between 7 and 7:30 a.m.
In order to ensure that the cost-intensive service levels went to the "right" customers, Barkawi first carried out a customer segmentation. For large industrial customers, solutions like KANBAN and order consolidation were important – while emphasis was removed from next-day deliveries and time windows. Plumbers, on the other hand, preferred a delivery the next day – often with in-car delivery. These measures all led to a 32% deduction in trip costs.
And taking a look at other process issues paid off as well. Parallel to the transport optimizations, Barkawi performed a warehouse audit to improve the storage processes. It freed up 400 square meters of space in the warehouse, and a change to the main incoming-materials processes radically reduced the process time, enabling the elimination of the interim storage stage before the final warehousing of the goods.
Summary: All together, the measures taken cut processing times and costs massively, while the ability to deliver the desired products on time improved, leading to more customer satisfaction.
That's what we call operational excellence!