15% cost reduction for building materials supplier Stiho
Stiho decided to differentiate itself through logistics performance. Under the motto “Logistics Champion,” the company aims to reduce costs while improving the performance of its logistics operations. An ambitious plan, for which Stiho enlisted the support of CQM. The outcome of the analysis was clear: the objectives are achievable, but changes are required. Implementation is now well underway.
15%
cost reduction achievable
From 4 to 3
distribution centers
At the same time
improve service
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Stiho, with annual revenue of €100 million, is one of the largest suppliers of building materials, timber, and sheet materials to the professional construction industry in the Netherlands. Customers can order materials through a growing network of branches and either collect them on-site or have them delivered to their job locations at a time of their choosing. Both branch replenishment and customer deliveries are managed through four distribution centers.
Logistics Performance as a Competitive Differentiator
Developments in the construction industry are forcing companies across the sector to make clear strategic choices. While cost reduction is an obvious priority, Stiho aimed for more.
“Periods of change also create opportunities to differentiate yourself,” says Erik van der Spek, Manager of Logistics Operations at Stiho. “We chose to improve our logistics performance to such an extent that it would provide a clear advantage for our customers compared with competing suppliers. At the same time, this logistics transformation created opportunities to increase efficiency and reduce costs. In other words, we set out to improve performance while lowering costs. It may have seemed like a contradictory objective, but we were convinced it could be achieved.”
“We set out to improve performance while reducing costs at the same time. It may have seemed like a contradictory objective, but we believed it could be achieved.”
Erik van der Spek Manager, Logistics Operations, Stiho
Logistieke optimalisatie bij Stiho
“Logistics optimization is highly rewarding,” says Jan van Doremalen of CQM. “Companies are often surprised by how much value can be unlocked through a focused logistics transformation. Stiho recognized this potential as well.” Together with Monique van den Broek of CQM and Stiho’s project team, led by Erik van der Spek, Van Doremalen embarked on the initiative: “Stiho wanted to move quickly. Within a relatively short timeframe, we gathered and analyzed all relevant data. We assessed not only the current operating model, but also Stiho’s long-term ambitions. These insights formed the basis for modeling and evaluating alternative scenarios for transportation, warehouse operations, inventory levels, and network design.”
Van der Spek adds: “Speed was indeed a key objective. Following the data collection phase, we immediately launched a ‘pressure cooker’ approach, in which a small group of employees was dedicated full-time to solving the challenge over a short period. This proved to be highly effective for the project.”
15% Cost Savings and Improved Service Levels
The team evaluated and analyzed a range of scenarios before presenting its findings to Stiho’s executive management. “Our analysis demonstrated that a 15% reduction in costs could be achieved while simultaneously improving service levels,” says Jan van Doremalen. “However, realizing these benefits requires several operational changes. Significant savings can be generated through better planning of customer deliveries and the elimination of unnecessary internal transportation movements. Inventory management must also become more tightly controlled, while warehouse processes need to be better aligned with market requirements. An additional benefit is that these changes create a strong foundation for substantial improvements in distribution center operations.”
Erik van der Spek adds: “The business case was compelling, and implementation has already begun. Some initiatives will take longer to realize than others. For example, the recommendation to consolidate from four distribution centers to three has significant implications for employees and inventory transfers. At the same time, we are redesigning our inventory policy and introducing hub structures across the country to improve replenishment flows from the distribution centers.”
Moving Forward Together with Logistics Improvement
“There is still much work ahead of us,” Van der Spek continues. “However, we are very pleased that we embarked on this journey with CQM. They listened carefully to our requirements and approached the project in a structured manner. CQM’s characteristic combination of analytical rigor and practical pragmatism was instrumental in creating a highly effective collaboration.”
Recognizing the value of the partnership, Stiho asked CQM to remain involved in the next phase of the transformation. This includes developing a more structured approach to continuous improvement and project execution, supported by methodologies such as Lean Six Sigma.
The publication and/or reproduction of text and images is permitted only with the express written consent of CQM.
Photo credits: CQM and Stiho.
Would you like to learn more about optimizing your logistics operations?
Please contact Monique van den Broek
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