A manufacturer of consumer products with distribution throughout the U.S. and the world contacted us. Our assignment was to find ways to reduce freight transportation costs and to relieve workload pressure from employees who needed to focus on managing other critical areas of the business. The client used a mix of LTL, Truckload, Intermodal, Ocean, and Parcel carriers.
Our customized strategy for this client included these services:
- A comprehensive transportation cost audit: In order to perform this work, we developed a database containing information regarding the company’s shipment activities. The purpose of the database was to provide a view of the company’s logistics operation and distribution network, including manufacturing and distribution facilities, shipment volumes to and from these facilities, and the associated costs for these shipments. The database fields included information that was critical to our analytical process.
- Freight rate and cost benchmarking: We performed a cost benchmarking process, comparing the freight rates and charges paid by this client to rates and charges actually paid by other companies for the same services. This activity involved accessing a large database of continually updated shipment information pertaining to thousands of other companies having both domestic and international operations. This benchmark process enabled us to identify many of our client’s shipments that could have been made at lower costs.
- Freight and warehouse services RFP: We developed a customized RFP for this client utilizing our proprietary approach that gives carrier and warehouse RFP respondents the information they need to provide the most competitive bids up front, utilizing “target” rates that were produced by the benchmarking process.
The RFP was submitted to a group of carriers that were pre-qualified and approved by the client. We evaluated the responses and determined the savings and service benefits that our client would realize under each carrier’s proposed rate scenario, and presented this information with our recommendations.
We produced hard-copy and electronic shipment routing guides for our client’s use (the electronic version was added to the client’s order processing systems and web site for use by vendors and company distribution managers). Using the most cost and service effective carriers noted in the shipment routing guides, our client was able to reduce its freight transportation costs by nearly 22%, or an annual savings of approximately $1.6 million.