Del Labs Gets the Freight Out (and In)
Co–founded in 1961 as Maradel Products and renamed in 1966, Del Laboratories was a leading manufacturer of cosmetics and over–the–counter pharmaceuticals sold through distributors, licensees, and partnerships, and operating in more than 60 countries. In 2005, Del Lab, a publicly traded company, was taken private by the Kelso Group, a private equity firm. Two years later, Kelso sold Del Labs to international fragrance giant Coty Inc. The acquisition was primarily driven by the strategic fit of Del products with the Coty diversification plan, but would not have been possible without tremendous improvements in the Del supply chain during the Kelso–owned years.
When Kelso purchased Del Labs it had good market share, very strong marketing and sales, and excellent relationships with customers. But its bottom line was underperforming. It quickly became apparent that a weak link in Del Labs' operations was supply chain logistics: its processes and practices for managing freight, moving finished goods to customers and bringing raw materials in from suppliers.
Supply Chain Edge was employed to help Del Labs understand how it was spending its money on transportation, and then to optimize its freight management systems to create consistency, provide reliability, improve quality and reduce costs to strengthen the bottom line. Because of the scope of the effort, Del Labs executives determined it would be best served by outsourcing the company's entire transportation management function to Supply Chain Edge.
Supply Chain Edge took over Del Labs' transportation department in the spring of 2006 and focused first on collecting the transaction data necessary to identify exactly how and where Del Labs was spending its money. Once it had those figures in hand, Supply Chain Edge immediately began renegotiating the company's long term contracts with its carriers. Once it had new carrier contracts in place, Supply Chain Edge took aim at improving key transportation processes to more effectively meet customers' service expectations.
With deep insights into its transportation spend, new and more favorable carrier contracts and substantially improved transportation, distribution, and sourcing processes, Del Labs experienced a savings of approximately $3 million in 18 months. With assistance from Supply Chain Edge, Del Labs was able to substantially improve its bottom line and, in the process, make not one but two owners happy.
