Supply Chain Veteran from Combe Suggests 2015 Investment Priority
The subject might not be as hot as S&OP or as intriguing as big data, but freight optimization is one of the highest-value opportunities facing consumer goods (CG) companies these days. Over the next three to five years, CG companies, especially those that rely heavily on LTL shippers (less than truckload) will be significantly impacted by driver shortages and carrier capacity shortfalls.
Changes in hours-of-service regulations that were implemented in mid-2013 came home to roost this past year, resulting in driver productivity levels falling to historical lows. Companies that initiate freight operation improvements in the new year will be less impacted by lost freight capacity in the marketplace. This is not new or revolutionary thinking. But revisiting opportunities to maximize the benefit stream and to help assure high service levels might just be one of the most important projects an organization can undertake. Here are three specific approaches that will add maximum value:
This is a win-win-win for all three entities. At Combe, we are testing the C.H. Robinson’s consolidation model and have collaborated with CVS to establish a common order drop day across multiple departments — to further enhance consolidation and make the effort that much more dollar- and carrier-efficient.
These are old-school optimization approaches, but they have dramatically increased importance considering today’s challenges regarding carrier capacity.
ABOUT THE AUTHOR
PATRICK BOWER | Bower is Senior Director, Supply Chain Planning & Customer Service at Combe Incorporated, producer of high-quality personal care products. A valued and frequent writer and speaker on supply chain subjects, he is a recognized demand planning and S&OP expert and a self-professed “S&OP geek.” Prior to Combe, he served as the Practice Manager of Supply Chain Planning at a boutique supply chain consulting firm, where his client list included Diageo, Bayer, Unilever, Glaxo Smith Kline, Pfizer, Foster Farms, Farley’s and Sather, Cabot Industries, and American Girl. His experience also includes roles at Cadbury, Kraft Foods, Unisys, and Snapple. He has also worked for the supply chain software company, Numetrix, and was Vice President of R&D at Atrion International. He was thrice recognized as a “Pro to Know” by Supply and Demand Chain Executive Magazine and Consumer Good Technology Magazine considered him one of their 2014 Visionaries. He is the recipient of the inaugural IBF’s Excellence in Business Forecasting and Planning Award.
*To read Bower's submission to the 2015 Review & Outlook: Prioritizing for Growth, click here.
Changes in hours-of-service regulations that were implemented in mid-2013 came home to roost this past year, resulting in driver productivity levels falling to historical lows. Companies that initiate freight operation improvements in the new year will be less impacted by lost freight capacity in the marketplace. This is not new or revolutionary thinking. But revisiting opportunities to maximize the benefit stream and to help assure high service levels might just be one of the most important projects an organization can undertake. Here are three specific approaches that will add maximum value:
- First, make sure your outbound shipments to retailers are as efficient as possible. If you don’t already have one, now is a great time for CG companies to consider implementing a transportation management system (TMS). A TMS consolidates loads going to the same location within the same timeframe. Consolidated loads are cheaper to transport and offer considerable savings, typically more than 10 percent of total freight cost. Think about it — why drive alone when you can take mass transit or carpool, both of which are cheaper and more efficient.
- Second, look to improve vendor/retailer coordination. One area ripe for examination is consolidation of “order drops” during the week. A health and beauty department at a retailer may drop orders on Monday, while the first aid department at the same retailer may do so on Wednesday. Most CG companies accept incoming orders from retailers more than once a week, across a range of departments or categories. Each opportunity to consolidate — by accepting orders once a week or all on the same PO, or by having all departments/categories drop orders on the same day — helps streamline freight operations, netting significant economic and operational benefits.
- Third, scrutinize any existing consolidation programs between carriers and retailers to uncover additional value. For example, third-party logistics provider C.H. Robinson and CVS have a consolidation program that optimizes not only the cost to serve CVS, but also streamlines the retailer’s inbound operations.
This is a win-win-win for all three entities. At Combe, we are testing the C.H. Robinson’s consolidation model and have collaborated with CVS to establish a common order drop day across multiple departments — to further enhance consolidation and make the effort that much more dollar- and carrier-efficient.
These are old-school optimization approaches, but they have dramatically increased importance considering today’s challenges regarding carrier capacity.
ABOUT THE AUTHOR
PATRICK BOWER | Bower is Senior Director, Supply Chain Planning & Customer Service at Combe Incorporated, producer of high-quality personal care products. A valued and frequent writer and speaker on supply chain subjects, he is a recognized demand planning and S&OP expert and a self-professed “S&OP geek.” Prior to Combe, he served as the Practice Manager of Supply Chain Planning at a boutique supply chain consulting firm, where his client list included Diageo, Bayer, Unilever, Glaxo Smith Kline, Pfizer, Foster Farms, Farley’s and Sather, Cabot Industries, and American Girl. His experience also includes roles at Cadbury, Kraft Foods, Unisys, and Snapple. He has also worked for the supply chain software company, Numetrix, and was Vice President of R&D at Atrion International. He was thrice recognized as a “Pro to Know” by Supply and Demand Chain Executive Magazine and Consumer Good Technology Magazine considered him one of their 2014 Visionaries. He is the recipient of the inaugural IBF’s Excellence in Business Forecasting and Planning Award.*To read Bower's submission to the 2015 Review & Outlook: Prioritizing for Growth, click here.