Analytics and Optimization Opportunities Uncovered During Initial Kick-off
Kick-offs are typically our favorite part of a project. Spirits are high; you get to meet a whole bunch of new, interesting and engaged people; and, you also get to learn the inside scoop of a business!
Our team was hired to help a manufacturer in the automobile industry implement a Transportation Management System (TMS).
In this particular instance, the first week consisted of visiting the distribution operations of two of our client’s business units. Our hosts were affable in responding to all our questions and showing us around. We are appreciative of their openness to change and availability; the project is off to an auspicious debut!
Several analytics and optimization opportunities arose from our discussion. Here are the most promising:
Opportunity #1: TMS Planning Horizon
The first idea was discussed at length with both business units. It has to do with the planning horizon for the TMS.
The current transportation planning horizon is quite short: 1 or 2 days depending on the circumstances. It would be quite interesting to quantify the impact of extending this value by a day, two or perhaps even more. Having a longer planning horizon would provide for more opportunities for shipment consolidation and multi-stop routes (i.e., cost savings) with the downside of delaying customer deliveries.
It should be noted that much of our client’s business was not particularly time-sensitive.
Opportunity #2: Expedited Service Costing
While many of the regular orders were not time-sensitive, the distribution operations also have to deal with numerous emergency orders that are usually shipped same-day. Our client charges a flat-fee for these orders irrespective of the weight, volume and destination of their contents. It would be quite interesting to quantify the true cost of these expedited shipments and develop a system that would charge the customer a fee that was more representative of reality. We suspect that in many instances the fee would increase significantly.
Opportunity #3: Zone Skipping
A considerable amount of our client’s business uses parcel shipment. It would be quite interesting to analyze the possibility of parcel zone-skipping. There will be more opportunities for zone-skipping with an extended transportation planning horizon.
Our client uses a similar process with Pool Distribution Centers with their LTL shipments.
Opportunity #4: Supply Chain Design
Each business unit operates its one-DC network. It would be interesting to quantify the benefits of a multi-DC network with shared product portfolio.
Essentially, this is Supply Chain Design (a.k.a., Network Design) where we would compare the expected savings on transportation and warehousing with the projected increased inventory costs.
One important stumbling block might be the ability for the IT systems to be able to handle this mixed inventory from multiple business units.
The main focus of this project is to implement a TMS.
The above analytics and optimization opportunities arose organically from our exploratory discussions. Inevitably, more will surface as we gain a better understanding of the supply chain operations.
Founded in 2003, JBF Consulting is a supply chain execution strategy and systems integrator to logistics-intensive companies of every size and any industry. Our background and deep experience in the field of packaged logistics technology implementation positions us as industry leaders whose craftsmanship exceeds our client expectations. We expedite the transformation of supply chains through logistics & technology strategy, packaged & bespoke software implementation, and analytics & optimization.
For more information, visit us at www.jbf-consulting.com