Lamacon found opportunities to reduce transport costs of the Reftinskaya poultry farm through an audit

2023: Reduced transportation costs

LAMACON found opportunities to reduce the transport costs of the Reftinskaya poultry farm through an audit. Lamacon announced this on November 27, 2023.

The Reftinskaya poultry farm for a long time kept tariffs for the delivery of finished products below market prices, however, in the face of continuously increasing transportation costs, the company required a new approach to optimizing logistics. The manufacturer has engaged consultants to audit ongoing processes and develop an action plan to reduce transportation costs. One of the main levers of cost reduction in accordance with the recommendations of LAMACON experts was the optimization of the structure of the poultry farm's own fleet and its effective use with the potential to reduce costs by up to 35% in certain areas of logistics.

In 2023, in fact, all companies on the Russian market faced the problem of increasing transport costs due to a shortage of drivers and transport. According to market participants, in some areas, price increases amounted to 40% year-on-year. Reftinskaya poultry farm was no exception: the company noted a significant increase in delivery costs by both own and hired vehicles.

Reducing transportation costs has become a focal point for the company's management. However, the existing mechanisms for controlling logistics costs did not allow us to reliably determine the reasons for the increase in costs and form a corrective action plan. The company had several options for reporting on transport logistics, but there was no single transparent KPI system and indicators that would allow analyzing the reasons for the deviation of actual costs from the planned ones.

We found that the current reporting system did not make it possible to effectively manage the logistics budget, and intuitive solutions in the new market conditions were not sufficiently reliable and predictable. One of the main goals of attracting auditor consultants was to develop a KPI system to determine the levers for reducing logistics costs, "said Timofey Malakhovsky, director of the transport logistics department of the Ural Agro-Industrial Group holding.

During the audit, the LAMACON team conducted interviews with functional experts and company management to identify bottlenecks in current planning processes and compare them with best practices and solutions in the market, and identified external and internal drivers of logistics cost growth and analyzed their impact based on reporting data over the past year and a half. The result of the work was the development of a KPI system and indicators, the calculation of their current state and dynamics, allowing managers and process owners to quickly track the reasons for changes in each of the indicators. For clarity and subsequent automation of reporting, a form of dashboards was developed.

In addition, the consultants prepared recommendations to improve the efficiency of the transport and logistics function of the manufacturer, which included: creation and updating of regulatory reference information to automate reporting forms, standardization of the budgeting process, revision of the rules and conditions for holding tenders for delivery services by attracted vehicles, control over the level of technical readiness of its own transport and its access to the line, implementation of the fuel consumption control process.

The results of the project have already been defended before the company's management and formed the basis for the strategy for the development of the logistics function of the Reftinskaya poultry farm. The group of companies, which includes the poultry farm, plans to continue cooperation with LAMACON as part of a project to mathematically model the manufacturer's supply chains to test a number of business hypotheses aimed at further reducing logistics costs.

Audit is the expertise we are developing at LAMACON. Our extensive experience with businesses from different industries allows us to find opportunities to optimize existing processes and determine the levers of cost reduction in supply chains. Most companies have uncontrollably growing operating costs, we see great audit potential as a tool to contain this trend - and the result of the Reftinskaya poultry farm confirms this, "said Dmitry Krasilov, CEO of LAMACON.