SUPPLY CHAIN SPIRALING. There may be savings opportunities by consolidation of multiple shipments with same origin and destination into a single shipment.
On a broader scale multiple LCL shipments on the same lane could be aggregated into a single FCL/FTL shipment with a much lower rate.
Both opportunities only exist for alert shippers with accurate TMS and data.
For an interesting case study read this article – What is the Most Effective Strategy to Massively Slash Shipping Freight Costs? from which the following story is extracted:
Case Study - A Mid-Size Business Wasting Money On Freight Costs Due To Careless Shipping Practices
I and my business partner were standing in the warehouse of a mid-size global player in a nice margin business. On the shipping docks were sitting a number of pallets – each half or more full of goods.
I asked about the paperwork for one of the pallets and was surprised to be handed a thick sheaf of papers. Right on that single pallet sat more than 50 shipments, all going from one large city to another.
Each was accompanied by a consignment note (and a Con. note fee of $35 each). So I asked why they were not being shipping in a single shipment, and distributed by a local courier?
Or alternatively, by a inter-city courier covering the entire shipment. “We have always done the things this way” was the answer. I calculated that – just those 4 pallets were wasting at least $3000 in additional freight costs.
That was over $100K a month – the practice was changed and the hole plugged straight away.
Notes: Supply Chain Spiraling
The purpose of this post is not to get you to start major supply chain revamps or multi-million dollars transformation programs. If you had an inclination to do so, you would have already done that.
In most cases, you would also have a list of consultants who could potentially help you with such a transformation program.
While, we do our best to get on to such lists for good companies, in this series of posts I am going to only talk about the projects you can currently do with the supply chain teams you already have working in your company.
There are a few other caveats too:
Few caveats of Supply Chain Spiraling
1, Do not do what will be the first instinct for many people - call in your logistics vendors and start trying to get better shipping rates from them. This is certainly not the right time to do that. On the contrary look everywhere but towards them to get your savings.
2. There will be a dozen or more posts in this series - each with one solid useful idea which worked in the past for a client of ours who called us in a dire situation when their three consulting lifelines have already failed.
3. These posts are in no particular order. Specifically, I am not trying to cover the most important or most relevant or high impact ideas first. That is deliberate for a reason, which I do not want to share here.
4. All these ideas come from our case study library of over 200 slides from the previous projects done over the past 20 years.
5. Not every idea will work for everyone. You will have to assess whether a particular idea is suitable for your company and its current situation or not. If the idea is not for you, just keep moving to the next post in the series till you come to an idea that you think will work for your company.
6. Each of the ideas encountered unexpected resistance and headwinds while being implemented. Eventually, each was proven a winner, so the story I tell in each case is largely based on facts. I only hide identifying information and details to maintain the confidence of our clients.
7. Many of the ideas were tried by the clients and abandoned because people did not probe past the first roadblock to seeing whether the road ahead was clear or totally blocked. You will come to numerous points during the course of implementation of the ideas where you will feel like abandoning them. That is time to take a helicopter view and review the lay of the land to make sure you are not abandoning a good idea for a minor and temporary setback. If in doubt, a quick call to us will help clarify the perspective in many cases.
8. There are things you would not do under normal circumstances, but now the circumstances are no longer normal. This means keep your mind open to doing the unusual in these trying circumstances.
9. If you work in the supply chain arena and are used to working in one particular way, keep your mind open to the fact the multiple generations of supply chains exist - each with its own set of innovations. If you come from outside the supply chain fold, never abandon your common sense to professional advice of any single supply chain professional.