Using Advanced Analytics for Distribution Cost Optimization of a Leading European Spirits Manufacturer 

Business Challenge

A leading European spirits manufacturer, generating annual revenue of approximately $1 billion, faced challenges in optimizing its distribution strategy, which was split between its own fleet and third-party logistics (3PL) vendors. The client's cost allocation practices were overly simplistic, relying on historical delivery data to calculate fleet costs. This approach failed to incorporate opportunities for order consolidation and staggering, leading to significant cost leakages at various levels.

Additionally, the absence of a robust comparison strategy hindered the identification of the most cost-effective delivery approach, necessitating a comprehensive solution to optimize their distribution operations.

How Quantzig Helped

Quantzig worked closely with the client to develop a comprehensive solution to optimize distribution costs. The approach included the following steps:

1. Framework Development: : Quantzig first built a framework to effectively calculate the total cost of shipment for self-deliveries, addressing the previous limitations of simplistic cost calculations.
2. Data Utilization: : Using data from the client's delivery management system, Quantzig prioritized deliveries and identified opportunities for order consolidation, optimizing the delivery process.
3. Comparative Platform: : A comparative platform was created to enable quick decision-making, allowing the client to determine whether deliveries should be handled by their own fleet or outsourced to 3PL vendors.
4. Advanced Algorithms:: Quantzig developed advanced order-dicing algorithms that identified the most cost-effective delivery options, ensuring optimal delivery costs for self-deliveries.

Results and Impacts:

The solution delivered a 29% reduction in total delivery costs with order-dicing algorithms catering to a 24% decrease in expenses from third-party logistics (3PL) deliveries.

Furthermore, the implementation of near real-time visibility into the distribution process empowered the client with better decision-making capabilities, thus, improving operational efficiency and driving cost savings across their supply chain.