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10 Strategies to Drive Down Your Transportation Spend

Jan. 11, 2008
Learn how to reduce overall transportation spending while increasing the efficiency of your supply chain.

If there's one thing all manufacturers have in common, it's the pressure they're under to drive down the costs to produce and deliver goods. Wilson Rothschild, who heads up supply chain management product marketing for solution provider Infor, offers these 10 strategies to reduce overall transportation spending while increasing the efficiency of your supply chain.

  • The network is flexible. Supply and production decisions influence transportation economics. Through a complete understanding of your network, evaluate and redesign supply chains so suppliers, manufacturers, distributors and retailers are aligned with advantageous freight lanes that reduce cost and improve service.
  • Set budgets and measure progress. As the saying goes, if you can't measure it, you can't manage it. Understand your transportation budget and carefully benchmark against it. Do bottom-up benchmarking by the lane, rate, service and mode, and then roll up into overall freight spend KPIs like hundredweight. Managing at the bottom and top ensures visibility in network changes as they occur.
  • Improve postponement strategies. Utilize transportation networks to improve cross-docking and postponement opportunities to reduce lead times and improve cash flow.
  • Negotiate constraints for price, capacity and capability over the long term. Balance price with a carrier's ability to expand as your business grows.
  • Improve inbound compliance. Make sure your freight spend is working for you. Enforce routing guide compliance to reduce maverick freight spend.
  • Improve transportation planning. You've paid for the space, so use it. Understanding the locations of load and unload points, size and the nature of the goods to be transported will make more efficient use of each cubic foot of cargo space.
  • Improve outbound consolidation. Think of it as carpooling for freight. Make sure that you get all the freight in a container that you can, and make sure that you optimize across all freight and modes.
  • Improve visibility. From order inception to final delivery, know what is happening at all times and anticipate the actions you may need to take.
  • Improve execution processes. Only pay for what you have agreed to in a contract. Constantly audit your shipments to ensure they meet all the terms you and your partners agreed to up front.
  • Integrate. View transportation and trade processes as an integrated process to understand how one impacts the other.
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