Transportation costs are often the major expense in distribution

In consumer product companies, freight costs often far exceed 60% of total distribution cost. Unfortunately, many of the costs associated with transportation -- like fuel and insurance, are driven by international forces.  And population demographics are very unfavorable for a plentiful supply of drivers.  All these things push operating cost of a truck fleet higher .  As such, it is hard for shippers to have any leverage over their carriers -- forcing more creative and innovative ways of attacking the freight-cost problem.  Here are two approaches that major companies have found successful:

        1.     Eliminate the need for shipments
        2.     Create and ship fewer, more efficient loads

Eliminate the need for shipments

How often does product made in Los Angeles get shipped from there to a warehouse in Chicago to be shipped back to Denver?   How often does product get produced at a plant and moved to an outside warehouse only to be moved back to be shipped from the plant?  Eliminating wasted moves is a significant opportunity to reduce total supply chain costs.

Transportation | Warehouse Optimization has two systems that support the elimination of shipments by smarter planning:

• AutoSPA  - Automatic Ship Point Allocation – determines the best place to ship any order from based on cost, margin, fill rates and available capacity.  More Info
  
• AutoScheduler – This scheduling genius that takes into account all factors to plan minute-by minute deployment of inventory and activities to support on-time shipping in a capacity constrained world

Create and ship fewer more efficient loads

A study of over 1 million trucks traveling on U.S. highways in June 2008 showed that  84% wasted more than 5% of their weight capacity.   Simply put, most trucks are not shipped full.  With this in mind, one major consumer goods company looked to see how they could increase shipment size.  They came up with the concept “Super Truck”  -- More product, Fewer Loads. 

Using a process that involves our AutoVLB (Automatic Vehicle Load Building) More Info software building better VMI and inventory deployment shipments combined with changes in some processes, the Super truck product delivers significant savings.

Procter & Gamble has gone on record saying that replacing their load builder with AutoVLB reduced their costs by 7%