Collaboration
is not a new term in the supply chain industry. It is, however, a term that we
are hearing more often from shippers throughout many industries. As shippers
look to implement strategic initiatives to operate leaner, they are looking for
additional avenues with which to gain multiple viewpoints and tap into wells of
synergies from outside sources.
Recently
a leading food and beverage manufacturer in the United States determined they
needed a strategic partner to assist them with creating a stronger, more
efficient supply chain. As many large manufactures do, this company grew by way
of acquisition over the course of several years. With each acquisition, they
grew in size, capability and power but lacked one key element…visibility over
their supply chain. The lack of visibility created a supply chain that often
operated disjointedly and segregated in their operations.
A
strategic partnership became an essential requirement to scale the companys
supply chain and deliver visibility and synergies back into the heart of this
network. This manufacturer determined the optimal partnership for them was to
transition from a technology relationship to a Managed Transportation Services
(MTS) partnership with Lean Logistics. They had leveraged Lean TMS technology
for many years but had limited success in scaling their network’s platform due
to the rapid growth they were experiencing. An MTS partnership between these
two parties began to develop and a laundry list of goals soon emerged.
What
were the primary goals this partnership set out to achieve?
•
Visibility of 3rd party freight across network
•
Analyzing trailer utilization
•
Controlling accessorial costs
•
Visibility of customers private fleet movements across network
Visibility
of 3rd Party Freight
The
first item that would ensure the success of all future projects was to gain
visibility of all their 3rd Party (common carrier) freight movements across
their network. To accomplish this, a team of individuals from both sides of the
partnership formulated an implementation process that would be replicated
across 40+ facilities. This process took into account 4 different ERP systems
and all manufacturing facilities, warehouses, co-packers and satellite
locations. This process also needed to be simplistic enough to gain the trust
and willingness to participate from hundreds of individuals within this
network.
With
a little luck and a lot of hard work, a total of 47 facilities were
successfully implemented within 16 months…the doors to network visibility were
finally wide open!
Analyzing
Trailer Utilization
Immediately
following the network implementation, cost saving synergies became immediately
obvious through the data. The Lean Logistics MTS team partnered with all levels
of the manufacturers team and began the study conversion of maximizing each truck
that left the docks. This load factoring initiative paved the way to a $1mm
savings, freed up capacity and forever changed the way the business operated.
Before long, facilities had internal stop-gaps in place to ensure all loads
moved at maximum capacity unless appropriate approval had been gained.
Controlling
Accessorial Costs
Further
steps were taken to accurately control carrier assessorial costs. Rate
parameters and documentation for certain fees became a standard across all
carriers. Additionally, the Lean Logistics MTS team worked with each facility
to determine underlying causes for high detention charges and created solutions
to minimize the occurrences of detention happening. Under the new procedures,
facilities ran smoother, carriers were more willing to move freight and
transportation costs went down. It is this collaboration effort, that has
enabled this manufacturer to have the capability to work with their carrier
partners to gain a competitive rate as their volumes continue to ride and the
market tightens.
Visibility
of Customers Private Fleet Movements Across Network
The
remaining piece of this supply chain puzzle was to additionally gain visibility
to the movements that are occurring with their own private fleet. Knowing where
their own drivers were operating has allowed them to additionally leverage
their own assets to control costs on lanes that have seen large rate increases
from the 3rd party carriers. In addition, this has proven a wise strategy in
reassigning 3rd party carriers to lanes that do not work well for the private
fleet. Synergies across the entire network can now be recognized and adopted.
It
has been said that you can’t do todays job with yesterdays methods and still be
in business tomorrow. More companies are realizing this truth and are
collaborating with strategic partners who can bring an infusion of cost savings
into their network and strengthen their overall supply chain in the process. As
we move collectively into this arena, I am amazed at the possibilities that
exist as we unite to help customers build better supply chains together.
http://www.leanlogistics.com/blog/2015/07/08/creating-stronger-supply-chains-partnership/