Transport Hub Specialist Retailer
Supply Chain Support
Challenge / Requirement
With a small but loyal customer base in Northern Ireland, the client, a specialist retailer inherently made a loss on every order dispatched to Northern Ireland due to the cost of transport and the inability of their in-house ERP system to apply additional transport costs for catalogue purchases. To avoid losing ground to competitors based in Northern Ireland the client deemed the loss made was an acceptable risk to maintain market share.
A number of opportunities were considered in an effort to reduce the cost impact of shipping products to Northern Ireland including: bulk ordering only options; creating a delivery tariff for different areas; direct from supplier dispatch (drop-ship). The most suitable option was developed through discussions with the incumbent transport/parcel company. Through minor changes to the way products destined for Northern Ireland were managed and a small increase to the lead time of products the transport company was able to create a “hub” area within their northwest depot. The purpose of the hub was to collate all orders being transported to Northern Ireland into one weekly delivery and transport them on one dispatch. Once they arrived in Northern Ireland, they would be separately dispatched to the customer through their local network.
Through strong project management, effective customer service and marketing the transition to the new hub transport method was implemented efficiently and with minimum disruption. Customers were informed of the change and given the option to opt into the new system with a small increase to lead time (maximum 5 days) or pay for a premium 2 day delivery (standard pre-change no cost option). All but a few customers gladly accepted the increased lead time and praised the level of customer service.
Quickly the change eliminated the loss previously incurred on each product returning a healthy profit of between 20 - 30%. The success of the change also opened up promotional offers previously only offered for mainland UK being extended to Northern Ireland, the effect was to actively increase market share in this region by 5% in the first 18 months.