Good Planning, Major Savings

The #pacesetter program is proceeding apace: Ron Geerds and his small team spent months working on new freight conditions and found considerable savings potential.

You have spent a considerable period of time checking the shipping conditions for all the transportation of DMK’s finished products, including MILRAM and the private label goods for retail and industrial customers. Why was that necessary?

It was and still is necessary to periodically review the costs of logistics as we have many very different transport processes: Normally, the goods are packed on pallets and delivered by truck. However, we also deliver blocks of cheese in cheese crates, for example, or cream in 1,000-liter steel containers, so they can be further processed, by confectioners, for example, or pizza and chocolate makers. Alongside road freight, we also transport goods by sea, mainly to Asia, Africa, Saudi Arabia or the Mediterranean. We asked ourselves whether we could further reduce freight conditions throughout the DMK Group?

How did that work out?

We formed a five-person team from DMK Transport Logistics, with a focus on purchasing, operations and controlling and we were also supported by a consulting firm. The freight connections with 300,000 shipments were put out to tender on the Coupa platform online and 700 service providers were invited to participate. There were three tender rounds and we then negotiated new terms with around 50 service providers.

Did that go smoothly?

Not always. The project took more time than originally planned. That was partly because of the volume and the complexity. Also, we included the subsidiaries in the call for tender, which meant the preparation time took longer: Recording the data, structuring data, sifting through service providers, describing the requirements, feeding data into the platform, and setting up the framework. That took about six months. Also the pandemic meant we had to completely change how we worked: Our consultant was suddenly stuck in London. But we managed to overcome this challenge quickly, using our new online tools.

All in all, it took you about a year to get the new conditions.

Over such a long period of time, it is difficult to keep up the pace and, above The #pacesetter program is proceeding apace: Ron Geerds and his small team spent months working on new freight conditions and found considerable savings potential. all, the motivation – there were ups and downs. I’m proud that as a team, despite the challenges we managed to maintain a high level of performance over such a long project. The small project team and shorter decisionmaking processes certainly made an important contribution to that success.

What were the criteria for selecting the new service providers? Did it just come down to the price?

Since the service to be provided was described in detail, and only service providers were approved who understood and accepted these requirements, the decision criteria were cost and performance. We also relied on our own experience with the applicants, of course.

How much did you save?

Around 4.5 million euros per year. That was a huge success for us and for DMK.

Ron Geerds, Head of Transport Logistic, DMK.