Case study · Aerospace & Defense
Utility aircraft maker cuts its multi-million-dollar freight spend 40%
Freight costs at a utility aircraft maker were rising faster than production. USC mapped every freight movement, opened bids on 1,800 shipping lanes to new carriers and negotiated directly, cutting freight spend 40%.
Results
40%
reduction in freight spend
The company's freight spend ran to millions of dollars a year.
The situation
The company had long managed freight separately from its bill of materials, the focus of earlier cost cutting, while its annual aircraft production rose sharply.
What the assessment found
- Freight charges rising faster than aircraft production
- Logistics cost per aircraft far too high
- Incumbent carriers not offering their best rates
- Brokers between the company and its carriers
How the work was done
Visibility: map every shipment
Defined each type of freight movement, its frequency and capacity needs, including spare-parts shipments to customers, before going to market.
Bids: open 1,800 lanes
Ran courier and over-the-road requests for quotation that let new providers bid on the lanes matching their strengths; even incumbents cut their rates.
Negotiation: deal with carriers directly
Used analytics-driven negotiation, cut out brokers and dropped small providers who couldn't meet cost and service needs.
40%
reduction in freight spend
Lasting impact
The company saved millions a year on freight and kept managing it as strategic spend. In related work, direct supplier negotiations also cut more than $200,000 a year from its bill of materials.
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