Case Study: Couriers and Logistics for The Bicycle Association Posted at: April 27, 2022 Posted in: All Background: The Bicycle Association (“the BA”) is the national trade body for the UK cycle industry. It’s mission is to grow everyday cycling and remove barriers to enable more people to enjoy cycling. Established in 1890 it counts most of the cycling industry’s most influential and ambitious businesses within its membership. Given the high value and awkward size of a bike, delivering them has always been a challenge. With the rise in e-commerce, especially during the pandemic, the power of the couriers increased such that delivery of bikes was refused in some cases (FedEx/TNT withdrew from delivering bikes for a major manufacturer) and in other cases prices rose even as the service levels fell. Since global economies opened-up post-pandemic, the surge in demand for couriers – allied to volatile demand for all things ‘bike’ (which spiked in the pandemic and subsequently fell) – and widespread increases in fuel costs, has exacerbated the difficulties faced by the industry. JMCL was tasked with devising and delivering a solution against this near impossible backdrop. Assignment Devise and deliver a solution to reduce delivery costs and improve service quality . Specifically a solution that serves all BA members – whatever their location and size – across all their delivery needs e.g., bulk & individual bicycle deliveries, e-bikes, clothing, accessories etc. Objectives Using our Enlightened Procurement methodology, we developed a solution based on consolidating customer demand, running a tender and then working with the chosen supplier to meet the objectives of the various stakeholders. In particular, we packaged and presented demand in a way that changes supplier perceptions of the courier bicycle market, encouraging them to invest and provide cost-effective, reliable and high-quality services. Stage 1 – Proof-of Concept: Sign-up Members’; Identify & Consolidate Requirements; Analyse & Stimulate Supply Market At Stage 1 we wanted to prove our Concept and worked with a group of thirty of the most interested and influential BA members to do so. We created a Steering Group, to channel members’ requirements and obtain rapid feedback for ours and our suppliers’ ideas. Through this we consolidated spend and developed a simplified specification to approach the supply market from a position of relative power. Not only did this significantly increase members’ leverage with suppliers but made the unattractive – Couriers refer to bikes as “dirty packages” due to their awkward shape and size making them unsuitable for automated processes – now attractive. From a procurement perspective it increased the range of suppliers we were able to attract and increased their desire not only to win the work, but also to invest in long-term solutions for the bike industry. As well as approaching known suppliers to the industry, we sought expressions of interest from new suppliers through a more novel recruitment approach, including placing adverts and articles in trade journals. This proved highly effective and attracted many credible suppliers. Although BA members required competitive costing – margins in the industry are tight – we teased-out that in most cases reliability and quality of delivery are paramount. So we ran two Invitations to Tender, with the first focussing solely on the quality and reliability of their service and willingness to commit to the industry long-term. We invited this shortened list of credible suppliers to then submit commercial terms. Further analysis and due diligence reduced our choices to two prospects with differing solutions. Both presented their proposals to the full BA membership. Following members feedback and further negotiation we appointed our preferred supplier. Solution Our supplier’s solution provides a free, individual survey to identify specific requirements e.g., pick-up points, products, volume, spend etc. This is then followed by a dedicated solution which is costed to reflect overall BA volumes and spend. In addition to providing high-quality, reliable service with highly competitive pricing our chosen supplier is investing long-term in: A Customer Service Team dedicated to the bicycle industryA dedicated, bicycle delivery network for members with higher value bikesA dedicated, bicycle delivery network for members with small volumes and / or remote locationsA dedicated bicycle delivery network for members focusing on cost Stage 2 – Expansion of the Programme The success of this Stage 1 has persuaded at least one organisation to join the BA – although that is not a prerequisite. It is also enabling our supplier to invest further in the specific requirements of the cycle industry. JMCL facilitates the entire process to ensure that BA’s members maintain their commitments and the supplier maintains theirs. We meet regularly with all parties which enables us to keep on top of members changing requirements, review market changes and to refine the supplier offering. This working together enables us to maintain momentum, identify opportunities and ensure issues are resolved quickly and seamlessly Stage 3 – Long-Term Aims In the long-term, our industry-wide coordinated procurement approach will continue to deliver sophisticated insights enabling further opportunities to drive cost out of the supply chain e.g. using technology platforms to build marketplaces. We’re also working on ways of making the supply chain more environmentally friendly, since the many steps in the process – from manufacture to customer delivery – mean that bikes are wrapped in cardboard and unwrapped a number of times. This underpins one of the BA’s further strategic goals: to transform courier management for the environment, as well as its members. Results in Summary Couriers – reduced cost of couriers and improved service levels for individual customers Procurement process has saved customers time as they do not have to negotiate individuallyImproved purchasing power with members acting as a cohesive groupSupporting BA in its drive for improved sustainability For further information, please visit www.jmclconsulting.com. Email Jonny Michael, CEO, j.michael@jmclconsulting.com