Value Stream Transformation for a Logistics Service Provider
About The Organization
The Organization is an LSP Operating at APAC Region. Their operations are majorly based on a Franchise Business Model. They operate on 6 Major lanes which contribute for more than 90% of their Revenue and all those Lanes are operated by Franchise. The organization’s core strength relies on a strong network and a very strong business development (BD) team. The BD team is part of the parent organization who onboard new clients and then the routine execution is handled by the Franchise.
The Vision of the Organization is to have a strong hold on the lanes they operated and be a market leader on the zones they operate on. At this point of time, they are not in a hurry for any sort of expansion. But the biggest concern is even though they have a great inflow of business, the exit rate of client and margins are too bad!
OPPORTUNITY
Tools Used: Value Stream Map
After a detailed analysis of the Financials and Operating model through a value stream map of the LSP, the key bottlenecks are –
- Business Operations is the Bottleneck
- Unhealthy business practices prevailing across many business partners impacting the growth
- Non-standard processes negatively impacting the Brand Value
- Huge Leakages eroding margins in multiple processes like Claims, Insurance, and so on
SOLUTION
Tools Used: Unit Economics Study & Process Benchmarking
- Value Stream and Unit Economics study are the two key tools used to document, analyze and build the Solution design for the LSP
- Unit cycle time data and Unit cost data is mapped at each stage of the Process
- Process Benchmarking also revealed the Quick Wins and the Action plans
RESULTS
After a 6 Months project and stabilization
- Standardization of Process lead to Capacity Increase by 32% which was used for New Projects without any Investment on additional resources
- Margins on LSP’s Major Lanes improved by 18% (not factoring any fee increase)
