How national retailer increases backhaul revenue by millions annually with process improvement
Company snapshot
Profile
Industry: Home and hardware retail
Size: 1,000+ employees
Overview
Hardware retailer bringing service, convenience and quality to local neighborhoods around the world.
Opportunity
Driving process efficiency to meet consumer expectations
Service, convenience, and quality are the top priorities of one of the world’s largest hardware retail organizations. Offering everything from grills to lawn mowers to power tools, the company prides itself on delivering essential items on time to customers looking to improve and preserve their home—an activity that took off during the pandemic.
From 2019 to 2021, spending on DIY home improvements spiked 44% to a record high of $66 billion. This company experienced tremendous business growth as a result, with a 45% increase in sales from 2020 to 2022. This business success was a challenge for the supply chain team who had to accommodate this surge in consumer demand with the same facility footprint.
This catalyst prompted the business to prioritize higher efficiency across all supply chain processes, from boxing logic to backhaul utilization, to retail fulfillment. To keep pace with customer expectations, the retailer needed to make a broader shift to pinpoint opportunities to build more flexible and agile processes.
To kickstart that change, the company partnered with Uber Freight’s Consulting team to embark on a series of ongoing Lean Six Sigma trainings. These trainings create a culture of continuous improvement that will help meet future customer service and savings goals, no matter the level of demand.
Solution
Leveraging Lean Six Sigma courses to advance supply chain processes
In the ongoing partnership, logistics experts from the Consulting team coach employees at this company using Lean Six Sigma principles. Projects last 12 weeks and are focused on challenges the business is currently experiencing, such as outbound delivery consistency, boxing acceptance rates, and crossdock efficiency. Once participants complete the course, they are able to quickly apply what they learned to improvement plans designed to reach specific KPIs.
For example, one logistics analyst came to the course with a fleet utilization problem: The company was seeing subpar backhaul revenue performance. The fleet tender acceptance rate for vendor pickup backhaul opportunities within 200 miles was 70.27%. The analyst’s goal for taking the course was to develop a plan to achieve a tender acceptance rate of 85% or higher by the end of 2023.
Uber Freight Consulting pros worked with the participant to develop a plan that used a DMAIC (Define, Measure, Analyze, Improve, and Control) process to drive improvements. The plan involved leveraging TMS technology to gain more visibility into fleet tender acceptance and performance. Increased visibility helped the analyst understand the root cause of why certain loads are rejected: fleets not being in the vicinity for a requested pickup date. With this information, the company can identify the vendors that should be picked up by its fleet on a regular basis.
Results
Process improvement increased backhaul revenue by millions of dollars
The backhaul utilization project, in particular, is helping the company identify priority vendor lanes, reduce lead times, and boost driver efficiency. This project alone is expected to increase backhaul revenue by millions this year. It’s also one of six process improvement plans currently in motion with similar outcomes and savings. And, just as importantly, the courses are promoting collaborative problem solving across the retailer’s logistics team.
Since kicking off the Lean Six Sigma partnership with Uber Freight, 24 team members are now Green-Belt certified with dozens on the way. Each participant uses their training to improve processes, save costs, and create a culture of continuous improvement.
These courses have empowered the supply chain team members to better strategize with one another and with other departments. As a result, the team members with relevant expertise are directly empowered to make improved decisions.
The business plans to send more employees through Lean Six Sigma courses on an ongoing basis, as well as participate in higher-level projects to give employees the opportunity to earn Black Belt certifications. The program is not only helping the company realize immediate time and cost-saving opportunities—it’s building a sustainable, continuous improvement culture for the long term.