Established manufacturer slashed delivery costs by changing operational model.

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SECTOR

Furniture

INDUSTRY

Manufacturing

EMPLOYEES

350

Established manufacturer slashed delivery costs by changing operational model.

BACKGROUND

Kingsdown has been making luxury mattresses since 1904. Clearly, they have been doing a lot of things right, for instance, with superior craftsmanship, and continuously improving design based on their own sleep research.

But they were no longer sure they had their US domestic network logistics rightsized. Under their long-standing operational model, a reliable logistics provider guaranteed prompt delivery through a dedicated fleet. That delighted their customers, but it came at an increasing cost. They also suspected hidden costs were lurking elsewhere across their supply chain.

Our engagement began as simple consultancy - to recommend changes based on a review of their logistics operational model and other supply chain operations. There was a proviso, though, that customers would not be materially disadvantaged by any change.

CONSULTANCY

“I have worked with many consultancy companies over the past thirty years. Orkestra is the only one I would fully recommend.”
Tim Price
COO Kingsdown

ENSURING SUCCESS

Based on our estimated cost savings, Kingsdown decided to take the plunge and change logistics operational model. They asked us to stay on and oversee the logistics provider selection process. We managed the entire process from tendering to recommendation (which Kingsdown accepted). It came out our predicted cost savings were right on the mark.

That’s when most consultants leave, but we aren’t comfortable with this approach. Resource bandwidth is often a constraint and many things can and do go wrong during implementation. We stepped in to ensure Kingsdown had a smooth transition and would fully realize the projected cost savings. As a result, all operational requirements defined in the RFP process were realized through the Master Service Agreement and implementation plan. Working closely with Kingsdown, we also managed the end-to-end onboarding process with the selected partner.

That put Kingsdown on track to accrue the expected first year savings for delivery operations of around 22% based on their US baseline spend. The anticipated ongoing annual savings will be 12%-30% from baseline.

A RAFT OF OTHER COST SAVINGS

Kingsdown were surprised by the scope they now have for reducing other costs. We identified many opportunities across several categories including SKU rationalization, reducing cost to serve, sales management, reducing other freight costs and production facility rationalization. We are currently helping Kingsdown work through the plan of action and accrue these savings.

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After analyzing their operations, we defined the current state of their fleet arrangement and the supply chain generally (such as customer orders, raw material pickup, distribution center transfers and returns).

In the process, we came up with many potential cost improvement opportunities with estimated accruable savings. We then developed a short term/long term go-forward strategy for realizing those costs without disrupting operations.

The top priority was improving delivery. We landed on three options ranging from an improved current state (renegotiating the contract, more cost-effective routing) through to a radically different logistics model.

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