Strategic Sourcing Even a Gearhead Can Love

REI cuts less-than-truckload transportation costs by 9 percent with ICG Commerce

Tempe, AZ  October 10, 2001  The staff at Recreational Equipment Inc.  better known as REI  will gladly give you the expert advice you need to climb Mt. McKinley, bike the Pyrenees or kayak the Amazon.

But when it came to navigating a strategic sourcing process to reduce its less-than-truckload transportation costs, the 63-year-old outdoor equipment retailer opted to use an outside service, ICG Commerce, to guide it to savings that beat REI's initial expectations.

REI, which manages more than 17,000 annual LTL shipments to and from its 60 retail stores and its distribution center, used ICG Commerce's RapidSource Transportation Program to reduce its rates while streamlining the normal sourcing cycle time.

ICG Commerce used its own transportation sourcing experts to conduct a strategic sourcing process. The ICG Commerce team evaluated the capabilities of 21 carriers across the United States and conducted negotiations to ensure the best price and service for REI.

The results have surpassed REI expectations. The company reports that it achieved 9 percent annual savings on its LTL transportation spend through three core carriers. That beat REI's original savings expectation of 5 percent.

"As a national retailer we rely heavily on an efficient LTL program to get the necessary goods to our stores on time and at a competitive rate," said John Strother, director of logistics for REI. "ICG Commerce's sourcing expertise has been instrumental in helping us streamline the logistics process, reduce the sourcing cycle time and save on transportation costs while still maintaining our stringent delivery service requirements."

The ICG Commerce program covers a variety of modes of transportation (truckload, LTL, airfreight, parcel, intermodal, ocean shipping, third party logistics). By combining its procurement technology and e-sourcing tools with its category expertise, ICG Commerce says it can negotiate with carriers to reduce the costs of customer's shipments while improving service levels.

Besides transportation, ICG Commerce also offers services addressing other areas of indirect and direct procurement.