Forrester TEI Study Highlights Flexe Logistics Programs’ Value
Key Takeaways
- 124% ROI for Flexe enterprise customers
- 50%+ reduction in new facility ramp time for Flexe customers
- $19M saved in capital costs over three years with Flexe
- $47.5M in revenue added in one year with Flexe
Consumer demands continue to evolve. As a result, leading brands rethink supply chain investments and adjust to marketplace changes and cost drivers.
Today’s top retail organizations adapt to dynamic market conditions. Many turn to programmatic logistics.
Flexe commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study. It examines the return on investment (ROI) enterprises realize by using Flexe.
Years of disruption forces new supply chain practices
Organizations struggled with the high costs and operational inefficiencies of fixed logistics practices. Building their own fulfillment and distribution centers was time- and capital-intensive. And regional third-party logistics (3PL) vendors required long ramp-up times due to sourcing, contract negotiations, IT integrations and lengthy implementations.
During the pandemic, shifting consumer demand patterns and subsequent supply chain disruptions exacerbated these challenges. Fixed networks limit the speed, flexibility and reach of an organization. And 3PLs don’t offer enough flexibility. As demand patterns continue to evolve, supply chain agility’s importance will increase.
TEI framework and methodology
To better understand the benefits, costs and risks associated with flexible supply chain investment, Forrester interviewed Flexe customers. From these interviews, Forrester constructed a Total Economic Impact™ framework to identify the cost, benefit, flexibility and risk factors that affect the investment decision.
The study’s key findings: Logistics programs drive flexibility and value
By taking a programmatic logistics approach, organizations dynamically expanded and contracted their logistics networks to meet market conditions.
They launched distribution centers closer to retail locations, shortening inventory replenishment times and improving in-stock rates. They opened seasonal fulfillment centers closer to end customers, reducing home delivery times. And improved the efficiency of their operations by consolidating logistics contracts.
With logistics programs, organizations realize benefits of $175.7 million over three years versus costs of $78.3 million, adding up to a net present value (NPV) of $97.4 million and an ROI of 124%. Other benefits include:
- $47.5 million increase in in-store and eCommerce sales. Supply chain flexibility reduces a Flexe customer’s restocking time by a week and sales income
- 50%+ reduction of new facility ramp time. By consolidating 3PL contracting with Flexe, an organization cut its new facility ramp-up time substantially
- $19 million in capital costs avoided over three years. Instead of undertaking nine new construction projects, a Flexe customer avoided substantial CapEx
- $3.4 million saved in capacity costs. As-needed storage allows companies to avoid fixed capital costs
Capture ROI, invest in flexibility
The blueprint for supply chain success is clear. Leading brands build flexibility. And logistics programs are one way to implement it.
Instead of making big, fixed CapEx bets amid economic headwinds, focus on flexible, technology-driven strategies and supply chain tools—from transportation and warehousing capacity to retail distribution and eCommerce fulfillment.
This investment strategy creates the flexible supply chain infrastructure needed to succeed in today’s business climate. Organizations that invest in flexible infrastructure can rapidly pivot to respond to market dynamics and:
- Avoid production shutdowns. A programmatic logistics partner can respond quickly to a need for additional storage space. Brands that manufacture their products avoid costly and disruptive shutdowns
- Take advantage of bulk-buy and volume-discount opportunities. Brands can take advantage of bulk-buy deals within Flexe’s warehouse network
- Support the ability to test and iterate. Flexible supply chain partners give businesses a low-risk way to expand into new market
- Drive overall resiliency. With supply chain flexibility, organizations are more nimble and able to respond to unforeseen disruptions. Brands improve sales, manage inventory replenishment, improve delivery times and solve network capacity challenges
Read the TEI report
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