LOGISTICS CASE STUDY
Materials Handling Equipment Tender
A leading food production group with multiple production facilities across the UK.
Material Handling Equipment costs for this food group was escalating and they required procurement support to understand cost drivers. Although they do have a group contract, it has not been managed properly because there are currently varying end dates for each truck thus creating supplier lock-in.
With a high switching costs, the objective was to benchmark and renegotiate with the incumbent to reduce costs and align contract end dates across the group in order to facilitate future tendering.
The strategy was to renegotiate the following cost buckets:
• Rental costs
• Finance costs
• Repair costs
• Maintenance costs
An analysis was undertaken to gain an insight into how the incumbent perceived its existing business with the client. Following this analysis, it was quickly identified that the company is an important customer to the client and could leverage its spend.
• 5-year contract negotiated and awarded with annual cost down targets
• All new trucks to align with contract termination dates
• Upgrade to gel batteries
• Upgrade existing battery chargers