Challenge

A national food and beverage business was running a single-tier logistics model across its entire customer base. This approach treated supermarket giants, strategic accounts, retail outlets, and rural customers in Far North Queensland in the same way; offering uniform delivery promises regardless of the cost-to-serve or customer value.

This created multiple challenges:

• High service levels / over-delivery to lower-value customers, eroding margins
• Inventory and working capital requirements were inflated to meet non-value-adding SLAs
• No clear understanding of what different customer segments valued the most and were willing to pay for

The leadership team sought to build a segmented, customer-centric operating model that aligned supply chain effort with value creation.

Approach

We designed and implemented a logistics strategy grounded in customer segmentation and willingness-to-pay:

1. Voice of customer insight

• Conducted structured interviews and surveys with supermarkets, strategic customers, retail outlets, and rural customers in Far North Queensland
• Analysed customer expectations for delivery frequency, reliability, lead time, and flexibility
• Differentiated between ‘non-negotiables’ (e.g., guaranteed daily delivery for supermarkets) and ‘nice-to-haves’ that added cost but little perceived value

2. Operating model redesign

• Developed a differentiated, multi-tier logistics service model to replace the previous single-tier approach
• Analysed the impact of new SLAs and KPIs to reflect the tiered model; ensuring operational teams were measured against the right performance targets by segment
• Designed a change management and communication plan to ensure customers understood the benefits of the new model and to manage any risk of dissatisfaction

3. Financial and operational modelling

• Built a cost-to-serve model for each customer segment, quantifying the cost of delivery and inventory under the new structure
• Modelled the working capital savings from reduced inventory holdings
• Assessed required operational changes across transport planning, warehouse scheduling, and fleet utilisation to support the transition
• Developed risk scenarios (e.g., customer pushback, increased rural delivery costs) and identified mitigation strategies, including premium opt-in services for customers requiring urgent delivery

Impact

$50M

Estimated savings in operational costs over 3 years

Segmented logistics model

Successfully transitioned from a single-tier to multi-tier service approach

Customer satisfaction maintained

Supermarket giants and strategic accounts retained premium services, while retail and rural customers accepted longer lead times without impact on satisfaction