Freight Management Case Study - Transparency, Efficiency & Savings
The case study outlined below is on an automotive supplier, although the name and industry could be replaced and would resemble thousands of other shippers' struggles.
The automotive supplier vertical has far reaching supply chains due to labor cost arbitrage, automotive assembly locations, manufacturing expertise, and global customers. These suppliers compete on razor thin margins and lean inventory making efficient, flexible and transparent transportation solutions a requirement.
Plastic Trim International (PTI), a division of Minth Group, is a global automotive supplier of exterior auto parts, such as fender trim, run channel molding, still plate, roof ditch molding, etc. The PTI manufacturing and assembly process is truly a global complex routing of raw materials and finished goods. For example, the base component might be imported from Asia, molded in Michigan, coated in Mexico, assembled in Michigan, and then shipped to the Tier 1 or Tier 2 automotive supplier before its final assembly and shipment to the automaker (BMW, Audi, Daimler Chrysler, etc.).
- PTI moved its goods in silos between various transportation nodes.
- Goods,which moved from A to B and then needed to get back to A were managed as two, one-way shipments.
- The various sub-suppliers were utilizing less-than-truckload shipments, where consolidation was possible but not executed.
- PTI operated its freight moves in a control tower fashion, but it did not coordinate that moves with various parties to find an optimal solution across the network.
- PTI had higher than industry average damage to its high-value components.
- Less than optimal cargo insurance coverage.
- Invoice errors and subsequent delays on payment.
Optimize the freight moves utilizing a transportation management system (TMS).
To begin, InTek Freight & Logistics analyzed the historical data.
The outcome of the analysis included:
- Determine round trip lanes and LTL consolidations opportunities.
- Negotiated more favorable contracts with regional and national LTL providers.
- As part of the negotiations, carriers bought load bars to to double capacity for their loads, which improved the cost per pound for PTI.
- Some lanes were negotiated to more advantageous flat rates.
- R² Freight & Logistics is involved on the front end of PTI's new supplier, manufacturing and customer locations to determine the the most optimal and efficient transportation cost component.
- To mitigate the impact of claims arising from damaged or lost product in-transit, R² established an all-risk insurance program for the appropriate commodities.
- This ensures that if the carrier’s liability is limited below the cost of the product, this premium policy kicks in and absorbs the remaining cost, reducing margin erosion.
- Implemented a web-based TMS, so planners and coordinators have real-time visibility to the movements.
- Established customized reports to analyze their historical costs.
- Capture freight invoices for audit and payment.
- Initial seven percent annual savings, with another ten percent shortly after.
- Reduced risk.
- Better visibility to all stakeholders.
- Transparency established between all the parties.
- Regular collaboration and feedback.
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