Background and Challenge
A leading North American concrete and aggregate supplier sought assistance in optimizing U.S. logistics, given recent changes to demand levels. The focus was on reducing the procurement, logistics, and overhead costs for their cement business. L.E.K. Consulting was tasked with finding 6% savings from the existing cost base.
Approach and Recommendations
The team undertook a comprehensive review of costs and then prioritized focus areas based on analysis of data and management input. Primary sources of savings related from reducing terminal operating costs, changing the seasonality of terminal sourcing and a holistic approach to redesigning the network in one region. We also identified the drivers of increasing costs and determined appropriate organizational changes and improved cost controls to lock in savings.
Results
A number of key operational and organizational changes were identified, which generated greater than 10% savings in targeted costs. The client implemented nearly all of our recommendations immediately into the next year’s budget.
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