Retailer Finds 7% transprotation cost saving by combining shipments
MichaelWatson 270002K5FS Tags:  transportation transportation_analyst ilog supply_chain 1,781 Visits
A retailer with multiple different chains of stores produced a specialty food product that was needed by different chains. Since the chains ran independently and had different requirements, they sent separate trucks to each chain. Also, the firm ran static routes so each store could get to better know the driver. These routes did not change frequently.
They used Transportation Analyst to determine the benefits of combining the shipments for the two chains together. For example, a truck would leave the warehouse and visit stores from each chain on a single route. Before they changed their business practices, they wanted to understand the potential benefit. They found they could reduce transportation cost by 7% and while providing better service. While it may seem obvious that combining shipments would yield savings, it is important to quantify these to understand the value of the change prior to making the change.
This study is part of a trend we are seeing. More firms are looking for savings opportunities through new transportation strategies. They are not only applying transportation optimization to the current practices, they are using the technology to look for new ways to do business.
For example, the map on the left shows an example of mode selection--- which customers should be served private, commercial, or LTL carrier, and for the truck load moves, which ones are multi-stop and which ones direct.
In addition, it is also important to analyze the back haul opportunities. That is, your selection of the outbound mode can depend the opportunities for picking up product from a supplier and bringing it back into your facility.