Over $2.5M a year saved by moving Little Caesars off vendor-managed freight

Carrier Sourcing & RFP Truckload Restaurant franchising
Carriers:
65 carriers managed in the bid
69d0bdb152f34d2db76d1e481f6dfb01336925fb

WHO

Business model

A US based franchise pizza chain with stores in more than 25 countries and territories, including in each of the 50 United States. As the fastest growing pizza chain in the U.S., there are over 5,400 locations worldwide. Freight is a pass-through to the franchisee, which is exactly why nobody was managing it.

Industry

Restaurant franchising, inbound truckload into a distribution network feeding thousands of stores.

PROBLEM

What they felt

Our client initially outsourced their supply chain team. The procurement team was focused on product, and getting goods to franchisees with a focus solely on product cost, not freight, as it was a pass-through to the franchisee.

What we found

Vendor managed freight is where your suppliers handle the distribution of their product to your warehouse and charge you back for freight. However, this isn't a simple pass-through, as there is often a mark-up on the freight, and a significant cost increase when markets shift. This is due to the supplier having their favored carrier, and using them no matter the cost to your client. Rates also changed monthly and without warning, which created a headache for tracking rates against the market and keeping up with the chargebacks to the franchisees.

WHAT WE DID

Prep and analysis

Our extensive benchmarking process identified that managing a truckload RFP and flipping from vendor managed to common carriers would increase reliability and visibility, while also generating a seven figure savings to the business.

Execution

We found by utilizing regional smaller asset based carriers for short haul runs and aligning lanes to larger national carriers provided complementary freight which yielded lower pricing. This also created an opportunity to continue to pass-through the vendor managed rates to franchisees and capture 100% of the savings for the corporation. We helped facilitate implementation of a new TMS for shipment tendering, and created a waterfall system with backup carriers to ensure all freight arrived on time and within budgeted costs.

We stayed on as part of the team

These efforts continued for over 4 years, balancing new lanes between common carriers and vendor managed freight, working with a satisfied customer who relied on us to be a supplement to their internal procurement department.

RESULTS

What they got

Over $2,500,000 saved a year, with rates locked for twelve months at a time

Over $2,500,000 saved annually, with rates locked for 12 months at a time where previously vendor managed rates changed monthly and without warning.

They also got rate reliability they could budget against, a TMS for shipment tendering, a waterfall of backup carriers so freight arrives on time and within budgeted costs, and the ability to keep passing the old vendor managed rates through to franchisees while the corporation captures 100% of the savings.

How long it took

Over four years, and still structured as an extension of their internal procurement department.

How we were paid

Contingency, then a fixed flat monthly fee for ongoing management

How much are you leaving on the table?

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