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February 2005
Failing to
consolidate small shipments
One of the single largest potential gold mines for
cost savings is the ability to consolidate small
Shipments. Reductions in costs of as much 40 to 80%
are possible, and surprisingly, simultaneously
improving customer service levels! Large volumes of
small shipments demand a good program of
consolidation in order to optimize the best possible
cost/service/benefit options. ([1])
A lot of shippers try to do this on a manual basis,
which is better than nothing, but not MUCH better!
However, no automated order processing system should
be installed without substantial attention to
creating a program for a computerized assisted order
consolidation program. The computerized system
should have the ability for the transportation group
to automatically check orders on the day an order is
scheduled to ship, check orders scheduled on the
prior day and checking orders scheduled on the day
after the scheduled day to the same zip code and
also to contiguous zip zones for possible
consolidation. This capability must be part of
any good order processing system in order to obtain
the maximum benefits out of a consolidation
program.
In addition there are other “paper work” savings
such as eliminating the need for individual bills of
lading, and the invoicing is expedited with fewer
invoices, fewer accounts receivables because of
fewer check payments etc. These savings could very
well be as important as the freight dollar savings.
Order handling, and the rules of handling and an
understanding why the decision has been made must be
fully understood by everyone directly and indirectly
affected by the execution of these rules.
Importantly, all of these entities should be
involved in the development of these rules that will
have a profound affect on each area of
responsibility. The ability to minimize or eliminate
the need for carriers to make more than a single
pick-up on the same day also reduces his unit pick
up costs and helps improve service on the delivery
to your customer. But it also saves you the
difference in your costs. For instance, paying
three minimum charges of three LTL shipments from
Boston to Chicago to the same consignee and totaling
500 pounds, costs $241.44 vs. $104.50 as a 500 pound
consolidated 500 lb. shipment or savings of 57%! ([2])
But in the final analysis, it is the logistics group
that has to design, initiates, AND sell the program
to everyone in the “Team Group A.” Then if approved,
Logistics is charged with the responsibility of
properly implementing and administering this program
in order to achieve the maximum possible benefits.
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TransAnalysis
291 McGowan Street
PO Box 5060
Fall River, MA
02723-0404
Phone: 508.646.1000
Fax: 508.646.1100
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