November 8, 2005
Volume 1 Issue 35

Methods to Reduce Transportation  costs

To help lower costs and cope with today’s gas prices, food distributors are searching for the best systems to reduce their transportation costs and improve on-time arrivals.  This is a cost that many distributors and wholesalers neglect because they have put the time and money into upgrading and automating their warehouses.  After a distributor upgrades their software, their next investment to their business should be transportation management systems because transportation is poised to become the next area where distributors focus on driving out costs.  With these transportation automation systems, when the transportation market is tight, having the processes and adaptability in place can enable a food distributor to maintain or even reduce costs, while competitors are losing. 

The applications of transportation management systems will enable optimal exploitation and balancing of resources to reduce total transportation costs, which will greatly improve customer service.  These applications will create continuous movement of the product from your distribution center to its destination point.  The planning applications of the transportation systems will help you select and determine the best service and equipment for each shipment.  Also, the planning process will void out the routing guides.  Three key applications that the system software can perform to cut costs are:

1. Visibility of Product on the Road:  Know exactly where your shipments are all the time.

2. Management of Trailers in the Yard:  Locate and control each trailer or container from the time it enters your yard, with complete visibility to each trailer and its contents, with status updates.

3. Dock Door Scheduling:  A web-based portal for appointment scheduling, configuring dock door equipment/capacity parameters and optimally matching loads to operational capacities and constraints.

These applications will help drive lower costs for your business; however, it will give you great potential to satisfy your costumers because it promotes on time delivery. 

Lastly, regardless of the size of your company and current transportation status, all companies should consider to cut costs:

• Prioritize transportation improvement initiatives through the lens of the customer
• Extend transportation management processes to deliver value to other parts of the organization, such as customer service, replenishment, and procurement
• Look for Integration Links between Transportation modules and your current software.
• Identify root causes of service failures and cost overruns by using scorecards and analytics to examine carrier performance and internal and trading partner processes
• Create a program to become more carrier friendly to buffer themselves from capacity shortages and rate hikes

DRIVE COSTS OUT OF TRANSPORTATION

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