You have to make sure that your supply chain management is at full optimization. Using a sophisticated and new direct plant shipping software program can minimize costs. The right software program can redirect multiple SKU orders. One is simple, but when you multiply the number of SKU orders, it can get complicated. A good software program can make all the difference.
It gets even more complex. How do you determine to ship from the plant if only 95% of the product is located there? If you do determine that it is ok to ship, how do the one or two missing pallets get ordered and later transferred to make the shipment complete? For most companies, it doesn't happen this way. These companies give up on anything but single SKU, fully in-stock orders because it is too tricky to do anything more complex. Their supply chain systems don't support this and they are forced to invoke the KISS (keep it simple) principle. They find the location with all the stock and send the order from there.
The KISS method - which is appropriate to call the old method - comes at a high cost. That is why companies, such as Procter & Gamble, realized they had to find a better way. P & G has an extensive supply chain management program and uses a distribution master scheduling system called AutoScheduler from Transportation l Warehouse Optimization to maximize their shipping by:
A. Pre-position inventory which will maximize DPS; B. Allows you to consider the best place to ship from; C. Checks to make sure the shipment is complete - you do this by re-deploying the inventory; D. Establish dock/staff schedule to achieve customer service goals
Effective supply chain management requires more timely decisions. Because many order management systems subscribe to the KISS principle, the creation of optimized rules to determine where orders should ship from is often determined by a strategic location analysis. This analysis, done every few years, looks at average shipments to determine, for example, that Denver is best served from Salt Lake City. However, not all orders are average. What if the order is far from average with the majority of the product being manufactured in Chicago? The stock would travel 530 miles past Denver, only to travel 530 miles back to the customer.
What is needed is a timely, capacity balanced optimization system that performs the sourcing analysis in near real-time and determines that the order should ship from the Chicago plant. There are tools for distributed order processing - but most of those are designed for the likes of catalog shippers. In the catalog world, if there is insufficient inventory in one location, then the order will be redirected to another. Most applications that tackle the more substantive issues of ship point optimization in companies shipping truckloads of consumer-packaged goods have been custom built. One new entry in the market is AutoSPA (Automatic Ship Point Assignment), also from Transportation l Warehouse Optimization. This system looks at the total cost of delivery - from producing plant to customer - as well as potential costs for product expiring in one location and being scrapped.
At the same time, AutoSPA can limit the number of shipments that can be made from any site. For example, if there are 200 shipments to be made in the South East, there is no sense in overbooking the Miami DC when Atlanta is idle. Rather, Miami should work to its capacity leaving some volume for Atlanta.
You can save nearly twice as much as DPS alone on ship-point assignment in supply chain management. It is worth doing.
Sign up for the exclusive free Truck Loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for truck operators at www.TransportationOptimization.com. While there, request a call back from one of the premier transportation consultants in the industry, Tom Moore or one of his associates from Transportation | Warehouse Optimization. Working for many companies in the top Fortune 50 - like Procter & Gamble and BP - they understand your unique problems and can help you solve them. Transportation l Warehouse Optimization - Solutions that work. Solutions that save. - 15359
It gets even more complex. How do you determine to ship from the plant if only 95% of the product is located there? If you do determine that it is ok to ship, how do the one or two missing pallets get ordered and later transferred to make the shipment complete? For most companies, it doesn't happen this way. These companies give up on anything but single SKU, fully in-stock orders because it is too tricky to do anything more complex. Their supply chain systems don't support this and they are forced to invoke the KISS (keep it simple) principle. They find the location with all the stock and send the order from there.
The KISS method - which is appropriate to call the old method - comes at a high cost. That is why companies, such as Procter & Gamble, realized they had to find a better way. P & G has an extensive supply chain management program and uses a distribution master scheduling system called AutoScheduler from Transportation l Warehouse Optimization to maximize their shipping by:
A. Pre-position inventory which will maximize DPS; B. Allows you to consider the best place to ship from; C. Checks to make sure the shipment is complete - you do this by re-deploying the inventory; D. Establish dock/staff schedule to achieve customer service goals
Effective supply chain management requires more timely decisions. Because many order management systems subscribe to the KISS principle, the creation of optimized rules to determine where orders should ship from is often determined by a strategic location analysis. This analysis, done every few years, looks at average shipments to determine, for example, that Denver is best served from Salt Lake City. However, not all orders are average. What if the order is far from average with the majority of the product being manufactured in Chicago? The stock would travel 530 miles past Denver, only to travel 530 miles back to the customer.
What is needed is a timely, capacity balanced optimization system that performs the sourcing analysis in near real-time and determines that the order should ship from the Chicago plant. There are tools for distributed order processing - but most of those are designed for the likes of catalog shippers. In the catalog world, if there is insufficient inventory in one location, then the order will be redirected to another. Most applications that tackle the more substantive issues of ship point optimization in companies shipping truckloads of consumer-packaged goods have been custom built. One new entry in the market is AutoSPA (Automatic Ship Point Assignment), also from Transportation l Warehouse Optimization. This system looks at the total cost of delivery - from producing plant to customer - as well as potential costs for product expiring in one location and being scrapped.
At the same time, AutoSPA can limit the number of shipments that can be made from any site. For example, if there are 200 shipments to be made in the South East, there is no sense in overbooking the Miami DC when Atlanta is idle. Rather, Miami should work to its capacity leaving some volume for Atlanta.
You can save nearly twice as much as DPS alone on ship-point assignment in supply chain management. It is worth doing.
Sign up for the exclusive free Truck Loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for truck operators at www.TransportationOptimization.com. While there, request a call back from one of the premier transportation consultants in the industry, Tom Moore or one of his associates from Transportation | Warehouse Optimization. Working for many companies in the top Fortune 50 - like Procter & Gamble and BP - they understand your unique problems and can help you solve them. Transportation l Warehouse Optimization - Solutions that work. Solutions that save. - 15359
About the Author:
Tom Moore and his Associates at Transportation l Warehouse Optimization will help you maximize Supply Chain Management and save you money. Sign up for a exclusive free truck loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for Truck Operators. Transportation l Warehouse Optimization - Solutions that work. Solutions that save.
