Top Five Ways Redwood Generates Value for Private Equity Firms

While assets owned by private equity firms have grown quickly over the last decade — increasing from $2 trillion in 2013 to $8 trillion in 2023 — today, deals are slowing down. With returns on investment dropping well below historic numbers, private equity (PE) firms are facing tough scrutiny. They need to make big changes in their owned companies to generate value and deliver returns to investors.  

Traditionally, the efforts of PE firms to increase the value of their portfolio companies have included cutting operating costs, restructuring, new management teams, and growth through mergers and acquisitions. 

At Redwood, we’ve seen firsthand that one of the fastest and surest ways to generate value is through logistics optimization. Since logistics represents one of the largest cost centers for many companies, it only makes sense for PE firms to focus on this function.

Most organizations have significant room for improvement as they navigate today’s complex logistics challenges — from rising costs and labor shortages to increasing supply chain disruptions. The great news is that advanced technology, innovative best practices, and new network models are readily available to close this performance gap. By applying these solutions and strategies, portfolio companies can quickly begin to cut operating costs, increase speed and efficiency, and achieve other tangible improvements.

Redwood has helped some of the world’s leading PE firms increase the value of their portfolio companies via logistics optimization. As a modern, full-service 4PL, Redwood understands how to grab quick wins by driving out costs in everyday operations — but our team of experts also understands how to drive long-term value via strategic improvements like network redesign. This combination of strategic and tactical knowledge makes Redwood the perfect partner for PE firms.    

Looking for Rapid Returns? Here are Five Key Logistics Improvements 

Because no two supply chains are alike, Redwood is service-and-solution agnostic. It offers a broad range of capabilities that can be customized to every organization’s unique challenges and objectives. In our work with hundreds of the world’s leading logistics teams, Redwood has identified five ways to achieve significant cost and service improvements, often very quickly.   

One of the biggest mistakes we see companies make is trying to manage the incredible complexity of today’s logistics landscape with manual processes and consumer-grade tools like Excel spreadsheets. Advanced technology solutions are widely available — and quickly launched via cloud delivery models — to connect logistics operations from end to end, in real time. As a result, processes are accelerated, visibility is improved, and disruptions are much easier to identify and resolve. Digitalization also sets the stage for enhanced communication and collaboration, both internally and with key trading partners. If the idea of achieving real-time connectivity seems intimidating, Redwood offers services and solutions that make the process faster and easier, including RedwoodConnect, our proprietary integration platform that ties multiple solutions and systems together. 

Optimizing routes, consolidating loads, accelerating yard and dock processes, and otherwise transforming the transportation function can yield significant cost savings for logistics teams. Redwood has helped customers save millions in transportation costs, while also improving service levels, by installing new best practices in transportation procurement and execution. A related benefit is often improved sustainability, as highway miles and emissions are reduced. Whether the best solution is freight brokerage, managed transportation, or some combination of the two, Redwood can provide hands-on assistance that helps PE firms quickly realize cost improvements.  

The warehouse network is a huge investment for any business. Distribution centers, or DCs, also play a critical role in fulfilling customer promises and building relationships. Given its importance, the modern warehouse should be a center for speed, efficiency, and profitability — but too often, that’s not the case. From mobile solutions and radio frequency identification (RFID) technology to robotics and process automation, the tools and best practices for optimizing DCs are cost-effective and easily accessible. Redwood can apply its leading warehousing expertise to transform the distribution network of portfolio companies — or we can provide hands-on management of the warehousing function in one of our owned facilities. 

From truckload to parcel, shipping charges represent a huge expense that can easily be studied and controlled — but most companies lack the time and resources. When logistics teams are facing daily delivery pressures, it can be hard to step back and ask, “Is this the best shipping option to balance profitability and service?” That’s where Redwood comes in. From negotiating better rates and contracts to redefining the carrier mix, Redwood experts can help portfolio companies significantly cut their annual third-party shipping expenses. Redwood can also help logistics teams optimize their less-than-truckload or parcel execution via specialized technology solutions and services.    

There’s a reason companies are increasingly exploring near-shoring and other new supply chain network models. While reconfiguring the supply chain may not be a quick win, it can be a very big win in terms of operating cost reductions. Redwood’s Supply Chain Advisory experts can rapidly assess your current network and make practical recommendations, as well as create an achievable timeline and investment plan. If the plan involves near-shoring or other global expansions, Redwood’s cross-border and international capabilities position portfolio companies for success, based on our firsthand experience and deep resources. 

The Value Is There. Redwood Helps You Capture It. 

While PE firms are currently facing  challenges in generating returns on investment, there’s incredible value to be gained by looking more closely at the logistics function. With two decades of experience and hundreds of successful customer engagements — including with top PE firms — Redwood knows exactly how to identify and seize opportunities for value creation within the logistics function.  

Any modifications Redwood makes to the logistics infrastructure — such as a new network model, an advanced transportation management system, or the addition of automation and robotics — stay with the portfolio company. These logistics improvements will help PE firms eventually sell the company, because they represent transferable assets that will continue to generate meaningful value. 

It’s clear that investments in logistics optimization can pay big returns for private equity firms. Contact the Redwood team to start capturing those returns and creating shareholder value today.