As we continue with part two of our series on how to reduce freight rates and save money on transportation, shipping truckload freight, we look at the remaining 5 tips that can put money in your pocket.
1. Optimize load size - always ship really full trucks (not nominally full loads). Most companies claim to ship full trucks but data obtained from the DOT, weighing more than a quarter of a million empty trucks, showed the median weight capacity is more than 47,000 lbs. Very few companies achieve anything near that weight. There are systems out there for optimizing shipment size and container loading. Procter & Gamble claimed a 7% savings by using a system called AutoVLB from Transportation | Warehouse Optimization.
2. Simplifying assumptions often lead to unnecessary or wasteful moves, and that can cost money. You can overcome this with enhancements to the order management system that dynamically defines ship point for any order based on cost and fill rates. This is an enhancement because most order management systems use a deterministic approach: if, for example, you are a customer in Indiana, you will always be shipped from Chicago. You don't want to ship loads unnecessarily. Here is how it works. In a deterministic order system, a customer in Indianapolis would receive a load from its supply point in Chicago regardless if the entire product was made and in stock in Nashville. Eliminating the unnecessary shipments to Chicago and then back to Indianapolis saves transportation costs.
3. Make sure you utilize the right shipping mode. The traditional method of using a tractor-trailer may not be the least expensive mode of shipment. When there is a high incidence of empty 40 ft containers, Steamship lines are very eager to get their containers back to port. Even though the load size may be diminished, the cost savings from loading these boxes can be great because of shipping deals that can be made.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Expand your base. You have to have the right combination of private fleet, dedicated trucks, dedicated capacity, and spot-market level purchases. Not only does this provide you with shipment security but also it can be very good supply chain management. This gives you good coverage for your high service customers with your private fleet on the short turnarounds, and any other thing that comes up. You have to manage it, but if run well, it can reduce freight rates.
Working with the right partner and eliminating waste is the best way to reduce truckload freight rates.
Transportation | Warehouse Optimization (TWO) had worked with the best of the best. Procter & Gamble, and other Fortune 50 companies are among their client list - P & G is a long-term client since 1992. TWO has saved P & G millions of dollars with transportation consulting solutions. Taking a long-term view, they understand the industry, the market place, and like good consultants do, keep the client as the top priority. Contact them at www.TransportationOptimization.com for your free consultation today. Also TEST YOUR SKILLS and see how well you manage your costs. Load a truck and see how efficient you are. - 14915
1. Optimize load size - always ship really full trucks (not nominally full loads). Most companies claim to ship full trucks but data obtained from the DOT, weighing more than a quarter of a million empty trucks, showed the median weight capacity is more than 47,000 lbs. Very few companies achieve anything near that weight. There are systems out there for optimizing shipment size and container loading. Procter & Gamble claimed a 7% savings by using a system called AutoVLB from Transportation | Warehouse Optimization.
2. Simplifying assumptions often lead to unnecessary or wasteful moves, and that can cost money. You can overcome this with enhancements to the order management system that dynamically defines ship point for any order based on cost and fill rates. This is an enhancement because most order management systems use a deterministic approach: if, for example, you are a customer in Indiana, you will always be shipped from Chicago. You don't want to ship loads unnecessarily. Here is how it works. In a deterministic order system, a customer in Indianapolis would receive a load from its supply point in Chicago regardless if the entire product was made and in stock in Nashville. Eliminating the unnecessary shipments to Chicago and then back to Indianapolis saves transportation costs.
3. Make sure you utilize the right shipping mode. The traditional method of using a tractor-trailer may not be the least expensive mode of shipment. When there is a high incidence of empty 40 ft containers, Steamship lines are very eager to get their containers back to port. Even though the load size may be diminished, the cost savings from loading these boxes can be great because of shipping deals that can be made.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Expand your base. You have to have the right combination of private fleet, dedicated trucks, dedicated capacity, and spot-market level purchases. Not only does this provide you with shipment security but also it can be very good supply chain management. This gives you good coverage for your high service customers with your private fleet on the short turnarounds, and any other thing that comes up. You have to manage it, but if run well, it can reduce freight rates.
Working with the right partner and eliminating waste is the best way to reduce truckload freight rates.
Transportation | Warehouse Optimization (TWO) had worked with the best of the best. Procter & Gamble, and other Fortune 50 companies are among their client list - P & G is a long-term client since 1992. TWO has saved P & G millions of dollars with transportation consulting solutions. Taking a long-term view, they understand the industry, the market place, and like good consultants do, keep the client as the top priority. Contact them at www.TransportationOptimization.com for your free consultation today. Also TEST YOUR SKILLS and see how well you manage your costs. Load a truck and see how efficient you are. - 14915
About the Author:
Tom Moore and his associates at Transportation l Warehouse Optimization will help you reduce freight rates and save you money. Transportation l Warehouse Optimization works with companies such as Procter and Gamble and BP and many other CPG companies. They can help you reduce freight rates and save money.
No comments:
Post a Comment