Cosmetics giant consolidates business unit for better transportation operations

  • December 05, 2022
Many lipstick color shade

A leading global cosmetics manufacturer wanted to improve their transportation operations to save money and increase efficiency. They partnered with NTT DATA's Supply Chain Consulting Transportation practice to create a centralized transportation department (CTD) and a purchasing function to manage transportation services for all their businesses in the U.S. The project focused on both inbound and outbound operations, including the transportation of raw materials to manufacturing plants and finished goods to and from distribution centers.

Separate divisions; duplicate efforts

Before this initiative, the company's divisions operated independently, each managing their own transportation needs. The CTD transformation aimed to:

  • Increase coordination between business units
  • Provide unified and transparent analytics and reporting
  • Negotiate with carriers as a unified organization
  • Offer new advancement opportunities for employees
  • Develop a support model for future business growth

The transportation team assessed the organization’s current operations. The identification of technological issues and problem areas informed the development and structure of the CTD transformation plan. Beyond the potential for savings, establishing a CTD allows business units to move together, in the same direction. In short, the CTD better positions the organization for omnichannel fulfillment, provides one point of contact for carriers, establishes clear employee advancement opportunities and fosters company-wide reporting and analytics.

NTT DATA applied a multi-tiered approach to achieve the desired outcome. They used key performance indicators (KPIs) to compare their overall performance with best-in-class organizations. Roles, responsibilities and methodologies were established to effectively manage a successful CTD. Then the team created a phased implementation plan that included staffing strategies and processes the organization could incorporate into their current structure.

To complete their tasks, the team performed site visits and functional interviews across the organization. They identified which parts of the current transportation model could be applied to the new CTD. After gathering and presenting their findings to company executives, NTT collaborated to create the new CTD's organizational structure. The structure included a customer service business unit with an internal communication plan to guarantee successful adoption and a seamless transition to the new model.

The performance assessment measured KPIs for inbound and outbound operations, freight procurement, budgeting, payment and the technology management system. The data was used to help prioritize areas of need versus areas of sustainability.

Harnessing enabling technology

The client's transportation management system (TMS) was, at the time, managed by their third-party logistics provider (3PL). However, the client's divisions weren't applying the software to its full potential. As part of the restructuring plan, we recommended the continued use of TMS but also suggested dropping 3PL-managed services in the future. To prepare for this change, we implemented a new training process enabling staff members to use the TMS independently. This improved the organization's comfort level with the system and established a standard reporting process for all divisions. The TMS also provided better load visibility for executives as well as customer service departments.

Site visits and functional interviews identified which divisions were operating most efficiently based on the predetermined criteria. These became the building blocks for the CTD transformation and helped provide a clear roadmap and implementation sequence. Expanding on an existing functional department, the team identified staff roles and responsibilities. Additionally, they developed a “responsible, accountable, consulted and informed” (RACI) matrix to support the governance of the new CTD.

In collaboration with the client, the Transportation practice identified the best location for the CTD and created a structured implementation plan. It included short- and long-term goals, a staffing structure with specific titles and responsibilities, a four-phase timeline and an overview of risk management and mitigation strategies.

One effective and efficient transportation organization

The cosmetics manufacturer has successfully centralized three operating divisions. They have also implemented carrier score-carding and established a centralized import/export support function. In addition, they have hired a dedicated transportation procurement director and are currently searching for a director of transportation analytics. According to the client, the transformation initiative is "progressing well" and the team is effectively tackling the common challenges that come with large-scale organizational and operational changes. Early reports show that the expected savings from centralized operations and increased visibility are surpassing forecasts during the project.

Contact us and see how NTT DATA’s Supply Chain Consulting Transportation practice will help you integrate and streamline your operations, achieving maximum efficiency through economies of scale. Our top supply chain talent, enabled by proven, leading-edge digital assets — tools, methods and content — deliver actionable insights and measurable outcomes to some of today’s largest and most complex supply chains.