Track record
Waitrose
Improving an outsourced distribution operator's costs and quality of service
The supermarket group Waitrose was delivering ambient goods, chilled products, fruit and vegetables to its retail outlets from several distribution centres (DCs). One key DC was outsourced to a leading third-party logistics service provider while other DCs were managed in-house. Waitrose believed that the terms of the long-standing outsourced contract had become unfavourable, and that there was considerable scope to reduce its cost.
So, at contract renewal time, Waitrose decided to review the operation with the provider. It was decided that the incumbent should be exposed to a full market test via a formal invitation to tender (ITT) process. PA's team assessed the potential for improvement by:
- benchmarking costs and performance to rank both the in-house and outsourced Waitrose operations against leading retail sector players and best practice logistics performance
- benchmarking the retailer’s distribution centres against each other
- analysing the current contract and tariff of charges
- visiting sites and interviewing the management teams.
From this PA developed a service level agreement (SLA) as a basis for discussion and to shape the overall quality of the future operation. This prepared the ground for a productive partnership with the potential outsourcing partners and in particular with the incumbent, prior to issuing a formal ITT.
Ultimately, Waitrose obtained a significant reduction in costs, saving many millions of pounds per annum. The tender and new SLA also led to improved quality of operation.
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