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Development of the global supply chain strategy for international freight-forwarder
A leader in Global Project Logistics with operations in 40 countries.
Company's business could be split into two major areas: GFF (General Freight Forwarding) and Projects (Logistics services for major projects). In 2010 the company was awarded a global contract with two oil&gas majors for provision of logistic services on global projects. A "cost plus" structure of the contracts has its implications as one of the requirements of clients was delivering 3% to 5% operational efficiencies every year. The company's operations were based on independently run GFF and Projects. Therefore, it could not gain synergies in procurement and supplier management. So, it was decided to do gap-analysis and develop global procurement strategy and procurement manual.
During the project the database of company's policies, regulating its activities was analyzed, all the operational, quality and procurement processes were mapped out, procurement portfolio and suppliers were segmented. In order to benchmark effectively company's rates subscription was made to IATA, Drewry and Shanghai Exchange indexes, KPIs were defined. To determine an optimal geographical location of consolidation points in Europe the gravity analysis was undertaken. Also, number some technological solutions providing visibility, control and possibility for running simulation scenarios for the most effective methods of supply chain management was suggested for consideration of company's management.
As a result of identified weaknesses in consolidation of purchase requisitions and underutilized buying power to leverage company's position, it was decided to concentrate strategic procurement decisions and functional control on spend efficiency in central corporate procurement department which would have to be set up in London. For that purpose, the procurement manual for global contract was developed. This Manual included policies and forms in the following areas: procurement guidance, professional ethics and сode of conduct, signing and expenditure authorities, thresholds, segregation of duties from purchase requisition to payment, tender process including supplier pre-qualification, quotation requests, requests of information and proposal, approved supplier list, communication, evaluation of proposals, contract award and approval, single vs sole source, record management etc.
Recommendations were made and all developed documents i.e. procurement & supply chain manual and relevant documented procedures were handed over to the company's management for "in-house" implementation.