Loss reduction by 14% thanks to supplier analysis
We identified 3 key points in the supply chain where the company was overpaying for raw materials. Optimization did not require layoffs or quality cuts.
We started by verifying facts at Logistyka Tatrzańska. The company was losing money, but no one knew exactly where it was leaking. Our analysis showed three weak points that cost them thousands of zlotys a month.
The challenge
In December 2023, Logistyka Tatrzańska recorded a margin 4.3% lower than in the same period a year earlier. The management saw that fuel and service costs were rising, but specific data on margins on individual routes were missing. Drivers were refueling at different stations without any discounts. Invoices for spare parts came from 12 different wholesalers, which made it impossible to negotiate good rates. For 17 months, no one monitored tire prices, which with a fleet of 34 cars generated an unnecessary cost of 12,450 PLN in each quarter.
Our approach
In January 2024, our team (3 people: an analyst, a logistics specialist, and an auditor) entered the client's office. For 22 days, we checked bank statements and 1,458 paper invoices. We talked to 8 drivers and 2 dispatchers to understand what purchasing on the route looked like. We verify facts, so we didn't just look at Excel sheets. We compared prices at current suppliers with real market rates in the region. We see the whole picture, so we also checked whether the frequency of parts replacement resulted from wear or lack of control.
The solution
Tatra Business Insight proposed moving away from 12 random suppliers in favor of 3 proven wholesalers. We negotiated a fixed 9% discount on parts and 5.2% on fuel at selected stations. We introduced a simple cost control sheet for dispatchers. We show facts about your business, so we also implemented weekly loss reports. Now every major repair over 1,200 PLN must be preceded by checking the price at two sources. No sugarcoating – it was a matter of discipline in the paperwork.
Results
After four months of work, operating costs fell by 14.2%. The company regained financial liquidity and began generating surpluses, which it allocated to modernizing its base in Zakopane.
Timeline
-
January 2024Audit of 1,458 invoices and verification of rates at current suppliers.
-
February 2024Negotiation of new framework agreements and selection of 3 main partners.
-
March 2024Implementation of purchasing control system and training for 2 dispatchers.
-
April 2024First profit report after implementing changes in supplies.
"Tatra Business Insight showed us hard data from the Tatras. We were overpaying for tires and oil for nearly two years, and no one noticed. Now we have more cash in the account."