May Verpackungen: alphalogs reviews logistics

May Verpackungen, now part of the Ardagh Group, supplies cans for tinned fruit and vegetables, peanuts and whipped cream, with more than ten warehouse locations across Germany. This requires extensive cargo transportation.

alphalogs took charge of logistics consultancy and planning, including reviewing and optimising May Verpackungen’s historic distribution structure. Analyses and outsourcing of the new distribution structure showed huge potential for cost reduction. For example, May Verpackungen was able to record savings of over 20% in its warehouse and 10% in its transport division simply by concentrating its warehouse locations. Avoiding preliminary runs from the production facility to the distribution warehouse, detours/cartage from and between external warehouses, and empty runs was crucial. May Verpackungen paid alphalogs a performance-based fee, which allowed it to reduce its own cost risk. This fee paid for itself within twelve months of the contract being awarded thanks to savings with service providers.

Analysis

The alphalogs analysis showed that May Verpackungen’s distribution strategy at the time was outdated. alphalogs’ analytical focus lay on three areas: logistics locations, logistical planning and outsourcing. The production and storage facilities were initially reviewed (strategic study). Logistical consultancy company alphalogs then calculated the exact monthly requirement for storage space (simulation tool/SAP data), and re-tendered the storage and transport services.

Planning

The alphalogs team also calculated storage and transport costs, compared the results with accounts, compiled a simulation tool, and calibrated it using actual data, conditions and costs. Further alphalogs services included: Simulating the long-term sales plan, devising alternatives with varying numbers and locations using an iteration process, calculating transport trips with preliminary runs to the initial distribution warehouse/hub, main runs (transport between hubs) and final runs from the hub to the customer, including road tolls and evaluation thereof using condition models. To finish, alternatives were compared, and the most appropriate distribution structure, including total costs and delivery service degree, was formulated.

Implementation

alphalogs implemented a reduced version of the distribution tool. Data from the long and short-term sales and production plans was adopted through set interfaces, converted into inventory, and distributed over the existing warehouse locations. Item and storage structures, as well as sales plan specifics, were taken into account. alphalogs illustrated over and under-capacities with an appropriate preview, took charge of tendering and awarding contracts for storage and transport services, and defined the future shipping structure as a key part of the tendering strategy.

alphalogs’ services also included compiling transport packages, creating data tables and pricing sheets, authorising computerised cost comparisons, providing detailed descriptions and interface definitions, and searching for optimum service providers. After two rounds of negotiations, the alphalogs experts filtered out the qualified offers, and prepared the contract appendices simultaneously with the tendering.

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