Transportation, travel, and infrastructure

Post-acquisition business and operations transformation in China logistics market

A leader in the global express industry acquired a major Chinese LTL transportation provider, creating one of the largest network footprints in China. Initial efforts to upgrade and integrate capabilities of the acquired local company failed to adequately consider local challenges and were met with resistance.

Challenge
Due to multiple major differences between the two companies – culture, language, business model, operational capabilities, expectations – they faced several post-acquisition challenges.

The company asked A.T. Kearney to assist with solutions for these challenges and provide help with professional operations management, which was lacking due to complex relationships and hidden incentives between suppliers, employees, and family members.
In addition, the company required solutions to mounting cost pressure because of increasing line haul costs as well as additional business compliance cost pressures from corporate and government policies.

Approach
A broad transformation program was developed and implemented over a year, covering the following areas:

Stabilize local operations
- Defined vision and direction for greater clarity
- Assessed, designed, and implemented operational improvements to show results and build momentum
- Developed performance measures and incentives to improve governance, control, and tracking
Initiate broader transformation
- Transform operational backbone (e.g., network) and launch structural improvements (e.g., line haul, PUD)
- Develop and implement new market strategy, product portfolio, and sales plan to enter the road express market

Results
The transformation program enabled the company to:

Achieve up to 10% savings on operations costs
Improve its speed and service by 20 – 40%

Through the operational foundation upgrades and the developed road express entry strategy, the company was able to rapidly offer road express service in over 200 network locations in first three months, and meet its revenue and profitability targets.