Article

Amid the complexities of global supply chains, geopolitical uncertainties, and the rising pressure to minimize operational expenses, logistics has evolved from a mere operational necessity to an essential strategic function. 

Logistics costs account for a significant portion of revenue in the automotive industry and  plays a critical role in maintaining operational stability. Therefore it is important that companies prioritize cost reduction through a structured performance optimization program to achieve both immediate savings and long-term optimization. 

Recognizing the considerable levers logistics cost optimization provides, a structured, data-driven approach is essential. The following five steps, informed by Horváth's insights into industry-leading practices, provides a roadmap for companies to enhance transparency, identify inefficiencies, and implement targeted initiatives that drive long-term value. 

1. Establish transparency in logistics costs 

Achieving transparency across the supply chain serves as the first crucial step in optimizing logistics costs. Frequently, the data needed for a thorough analysis is dispersed across multiple sources. Consolidating this information into a standardized, well-organized data set enables the identification of key cost drivers and provides a comprehensive overview of the logistics cost structure. 

2. Analyze logistics cost data and conduct on-site interviews 

With transparency established, logistics costs can be broken down into discrete components. Examining the data for anomalies and benchmarking each cost component against internal and external standards, helps to identify specific areas for improvement. Insights from on-site interviews can further refine the analysis by offering practical perspectives that often expose issues not apparent in data sets alone. These combined findings, when aggregated and clustered, enable the isolation of root causes, establishing a solid foundation for the development of targeted optimization measures. 

3. Develop targeted optimization measures 

With a comprehensive understanding of cost drivers and inefficiencies, targeted measures can be developed. Assessing their broader implications is crucial to ensure they have the desired impact, as changes may affect multiple areas within the organization. Sensitivity analyses, cross-functional team involvement, and the integration of on-site feedback help to ensure that the measures are both effective and sustainable across all functions. 

4. Establish a clear roadmap and timeline for implementation 

To ensure the effective execution of optimization measures, a clear roadmap detailing the implementation process should be established. This plan should encompass essential milestones, well-defined responsibilities, and performance indicators for each measure. This structure facilitates accountability, enables ongoing progress monitoring, and helps to align all stakeholders. 

5. Continuously monitor, measure, and improve 

Finally, continuous monitoring should be maintained to capture valuable insights into logistics performance. This process involves evaluating outcomes against established performance indicators and refining strategies as new insights are gained. Regular feedback from operational teams ensures that logistics remains agile and adaptable to evolving business objectives. 

Building on this approach, the following chapter presents key insights from a case study of one of our clients – an automotive supplier with its plant in Mexico, addressing challenges commonly encountered across industries. Therefore, this summary seeks to inspire organizations to consider the potential benefits of critically reviewing their own logistics processes. 

The project, initiated to address deviations from the logistics cost budget, has provided our client with a thorough evaluation of logistics expenses and processes. Through the compilation and analysis of documents, cost data and invoices, a stable baseline was established, confirming consistent performance. However, it was the consolidation and clustering of insights gathered from on-site interviews with stakeholders across multiple departments and hierarchy levels that uncovered key areas for improvement, delivering valuable operational insights and highlighting previously unrecognized challenges for the plant in Mexico. Outlined below are the six key areas identified for improvement in the project. 

Standards & data management 
Establishing and maintaining consistent standards has been reaffirmed as vital for supporting data quality and informed decision-making. Proposed measures included regular monitoring of compliance with internal guidelines and enhancing access to organizational data. 

Processes & roles/responsibilities 
Streamlined processes, clearly defined roles, and cross-plant best practice exchanges have demonstrated their critical importance in enhancing accountability and promoting effective collaboration. 

Supplier identification & development 
Enhanced communication standards, including advance notifications, have been identified as essential for facilitating coordination, and fostering stronger partnerships and cost control. 

System & process improvements 
The automation of tasks such as invoice processing has proven to be a crucial efficiency driver, reducing manual efforts and streamlining workflows. 

Leadership & ownership 
Strengthening accountability and leadership within the organization emerged as a key focus area. The project aimed to cultivate a culture of responsibility by developing a structured leadership framework, thereby enhancing support for mediation tasks and reinforcing alignment across departments. 

People development & training 
The project results underline the importance of structured training programs and continuity measures, such as the introduction of cross-position deputies or the onboarding of new employees, in order to anchor the knowledge of standard processes and governance structures among employees and maintain stable operations. 

The targeted improvements in the six identified key dimensions form a solid foundation for traceable and transparent control of logistics costs. By systematically monitoring and continuously optimizing processes along the entire value chain – from demand planning to goods receipt – significant efficiency gains can be achieved, and additional cost-saving potentials in logistics processes can be unlocked sustainably. 

Kröber, J. /  Nagler, D.