We pick up with part 2 of our series on how to reduce freight rates and save money. In our conclusion, we discuss the next 5 key tips on how to save money on transportation costs.
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. Keep abreast of the market and renegotiate the freight. And when you can, lock in the rates for multiple years. Market conditions, your freight payments, and timing dictate this move, but if it looks good, take the chance. It can reduce freight rates for many years.
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.
The best way to reduce freight rates is to cut waste and work with the right partner.
When you consider a Transportation consultant, consider Transportation | Warehouse Optimization. They have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. Transportation | Warehouse Optimization takes a long-term approach, they know the market place, and they keep the client as top priority. Contact them at: wwwTransportationOptimization.com (615) 791-8000 for transportation cost reductions or solutions to warehouse challenges. While visiting their website, TEST YOUR SKILLS and see how well you can load a truck or manage cost savings. - 15359
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. Keep abreast of the market and renegotiate the freight. And when you can, lock in the rates for multiple years. Market conditions, your freight payments, and timing dictate this move, but if it looks good, take the chance. It can reduce freight rates for many years.
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.
The best way to reduce freight rates is to cut waste and work with the right partner.
When you consider a Transportation consultant, consider Transportation | Warehouse Optimization. They have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. Transportation | Warehouse Optimization takes a long-term approach, they know the market place, and they keep the client as top priority. Contact them at: wwwTransportationOptimization.com (615) 791-8000 for transportation cost reductions or solutions to warehouse challenges. While visiting their website, TEST YOUR SKILLS and see how well you can load a truck or manage cost savings. - 15359
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 consults with companies such as Procter and Gamble and BP and many other Fortune 500 companies. They can help you reduce freight rates and save money.
