The Client
Miele is a German manufacturer of high-end domestic appliances and commercial equipment. 2PL Advisors was initially introduced through a partner to provide advice and recommendations on a new regional carrier for their network.
The Challenge
Miele had gone many years without taking a good look
at their LTL network. While they had some good regional
carriers, 75% of their transportation spend was with one
carrier managed by a 3PL.
Miele had found themselves vulnerable if anything were
to happen with that capacity; additionally, they had seen
increased costs over the last several years. They were ready
to entertain bringing new LTL carriers into their network;
however, they had little carrier knowledge and experience
outside of their own network. Miele offers a high end
product shipped mainly to small dealers and they needed
freight carriers that understood that and were well versed
with handling the products.
Lastly, Miele had carriers on several different base rates,
FAK’s, and cost structures. They wanted a way to get everyone unified on the same pricing structure and needed
expertise as to what the right base rate, FAK, fuel surcharge
and accessorials to request. They wanted to control the
process and make the decisions, work with carriers
directly, but needed help.
The Solution
2PL Advisors was originally brought in to help Miele with
selecting and implementing a new western regional LTL
carrier directly, without any brokerage. After that project was
successful it came to light that Miele was looking to do an
entire network bid for both LTL and Truckload; however, they
were looking for help. They had met with some companies but they wanted to charege 5-6 figures to run the RFP.
The other option was with a 3PL that would take over the
process, carrier relationships, and carrier pricing contracts.
That’s not what Miele was looking for.
Because 2PL Advisors runs RFP’s regularly and all the
relationships, pricing and contracts remain directly with
the shipper (no brokerage) and the shipper can control
as much or as little as the process as they wanted, and it
would not cost Miele anything for the support to run the
RFP, it was a perfect match.
Goals were set that Miele would like to keep their
incumbent regional carriers but also gain a better
understanding of new carriers and those that would fit
well in the network while bringing down overall costs. 2PL
Advisors would run an RFP that included their incumbent
carrier base, but also a select group of new carriers
recommended by 2PL Advisors based on experience
with similar shippers.
A timeline was set and the first few weeks were
dedicated to data gathering and cleansing. 2PL Advisors
believes that a successful RFP starts with thorough,
accurate data that carriers can trust to run their costing
scenarios and ensure the best long term outcomes. Data
was pulled from many sources and blended together to
depict an accurate picture of the freight movement and
network.
Time was also spent evaluating classes and densities
to determine the best multi-tiered FAK structure to
incorporate a diverse product list with varying densities.
A base rate, fuel schedule, and accessorials costs were
also selected that all carriers would utilize.
The select group of new carriers was developed based
on 2PL Advisors experience with those carriers through
similar shippers. This way Miele did not have to guess
if the carrier would be a good fit for their network and
product, it had already been proven.
Once ready, the 2PL Advisors team sent out the RFP,
communicated with all carriers, fielded questions, kept
everyone to the deadlines, and managed NDA’s and other
documents required. After proposals were received, a
master cost analysis was generated to show multiple
areas: how incumbent proposal costs compared to
historical, how new carriers compared, savings per
pricing zone, etc. Everything was put together so Miele
had an interface to look at that showed the key areas and
results of the bids and was also easily digestible.
The Result
Miele now had all the information it needed on pricing
as well as advice and recommendations on new carriers
to start making award decisions. After some additional
negotiations all regional incumbent carriers remained
in place and Miele awarded several new carriers, both
nationally and regionally to build a strong carrier network.
Even with taking some concessions to keep incumbent
regional carriers in place, Miele realized an overall 28.6%
reduction in LTL costs with the new carriers providing a
36% reduction.
2PL Advisors remained involved to ensure a successful
implementation: communicating awards and pricing
documents to all carriers, arranging for onboarding calls,
and setting up accounts and logins with the new carriers.
While all day-to-day operations are now conducted
directly between Miele and the carriers, 2PL Advisors
remains involved to address any major issues, capture
and report carrier KPI’s, as well as conduct quarterly
business reviews to ensure that the current carrier mix is
the correct one and that cost saving metrics from the bid
are being hit.
