Transportation Analysis Pays Off for Computer Products Firm
A leading US manufacturer of computer accessories makes many products in China and then funnels them into a single distribution center on the West Coast that serves hundreds of retail clients. The company contracted with various freight services to send the products to retail customers using different modes of transportation, including small-package air, small-package ground, less-than-truckload, truckload, and heavy-weight air freight. The company wanted to have a better understanding of transportation processes and to control transportation costs. To do so, it hired the services of UPS Consulting (UPSC).
UPSC undertook a careful analysis and helped the manufacturer to reduce its domestic transportation costs by approximately 30% by the following means:
negotiation of better rates with new freight service providers;
setting up a returns program with a single carrier that picks up and returns the product using the most cost-effective transportation mode;
development of a user-friendly one-page guide to carrier and mode selection that matches the weight and size of a parcel shipment with the preferred shipping method;
helping employees to understand shipping parameters;
establishing a compliance system that requires weekly meetings to review shipping activities and handle any special issues that arise.
This article has explored major sources of cost savings in a production and supply chain and identified some techniques used by supply chain personnel such as buyers, inventory managers, and transportation planners. The techniques identified were discussed by grouping supply chain processes under the common supply chain drivers of procurement, design of the supply chain, inventory, transportation, warehousing, and collaboration.
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