Rock-solid competences set a new agenda in Toms Group's logistics agreements

"Better and more structured agreements" - and a renewed constructive dialogue with suppliers. These are two of the significant improvements Toms Group emphasizes after a major logistics tender in collaboration with TransportRådgiverne.

Full range of logistics services
The stakes are high every day when gold bars, marzipan bars and other sweet temptations roll from the Toms Group's production to external warehouses - and on to retail customers around the world. The demands for precision and quality are tough in the Fast Moving Consumer Goods Market, and at the same time, logistics is a significant budget item.

However, it had been several of years since the Toms Group overhauled its logistics agreements last time. Therefore, the company decided to conduct a major logistics tender. Morten Jensen, Head of Planning & Logistics at Toms Group, says: 

We needed to shake things up. To reset the discussions of recent years and restart our collaborations with a new, clear baseline. We didn't have the resources to do this ourselves, which is why we decided to bring in an external consultant,

After some initial explorations, Toms Group chose to outsource the task to TransportRådgiverne, who previously solved partial tasks for the company. This time, however, it was the overall logistics that was on the table: The external warehouse operation in Denmark, transport from production in both Denmark and Poland, and distribution to customers in Denmark, the rest of Europe and overseas markets.

To keep momentum, TransportRådgiverne assigned two project managers and a larger team to the project.

Full mapping provided a strong starting point
The key to a strong negotiation position is credibility. This was clear to Morten Jensen, which is why it was crucial to document the Toms Group's needs and customer requirements with what he describes as "an enormous level of detail". Nothing could be left to interpretation or later discussion. Morten Jensen says:

The mapping itself is extremely complex and time-consuming. But we found that TransportRådgiverne delivered, and they gave us a very well-structured, data-based overview. The analyst also showed her strength when we needed to go backwards in the calculations. We could feel that she really understood the very complex picture, and that created confidence in the process," says Morten Jensen.

Where should the Centre of Gravity be in logistics?
The Tom's Group also wanted to challenge status quo when it came to the external warehouse: Should it continue to be located on Zealand (Denmark) - or would it be better to move to Jutland (Denmark), northern Germany or southern Sweden.

To create transparency in the decision-making process, TransportRådgiverne carried out a major analysis of the different scenarios with an impact calculation of all logistics costs. A calculation that required a deep understanding of Toms Group's warehouse operations and included everything from inbound transport, warehouse rent, warehouse handling and co-pack to outbound transport.

Rock-solid competences drove the contracts home
In his evaluation of the process, Morten Jensen emphasizes the importance of bringing an external advisor on board - and also has clear criteria for which one:

You have to ask yourself if you have the resources to map out the task and negotiate the agreements. For one thing, it's time-consuming, and for another, operational experience is not enough. The task also requires that you know the supplier landscape and know what demands you can justifiably make in the current market. Both in terms of prices and terms.

For a company of the size as Toms Group it was also crucial that their advisor had the clout to create real competition between the market leaders - and drive the sometimes tough negotiations.

- Here we found the project manager to be rock solid. Self-driven for long stretches and good at assessing when to involve me," he elaborates.

New constructive dialogue
It was an advantage for Toms Group that TransportRådgiverne tested the suppliers and took the critical role in the process. This gave Morten Jensen and his colleagues room to focus on the relationship with the suppliers and the future in their dialogue. Morten Jensen says:

The conclusion is that we have achieved what we wanted in the agreements. At the same time, we have created a motivated group of suppliers with whom we have a constructive dialogue. Now the focus is on continuing to reduce complexity and develop together,

After the contracts are signed, Toms Group has a 2-year service agreement where TransportRådgiverne performs invoice checks and is available for any challenges or new needs.

In the collaboration with TransportRådgiverne, Toms Group emphasizes, among other things:

• The logistics agreements have been thoroughly cleaned up, both in terms of number of suppliers, terms and prices.
  
  
• A new approach to shipping contracts ensures continuous optimization during the contract period - with less effort.
• Thorough analyses provided deep, accurate insight into your own requirements and needs - and a strong negotiation position.

• TransportRådgiverne created a negotiation strategy that created real competition in Toms Group's favour.
  
  
• Toms Group verified that their prices are in line with the market.
  
  
• The process and the new agreements have paved the way for a constructive dialogue with suppliers, focusing on better operations.
  
  
• Strong competences at TransportRådgiverne provided peace and confidence in the process - and good agreements.