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Distribution Technology & Process Improvements
The insatiable need for new products, the latest products, and products with the most features has thrown the world supply chain into a state of permanent and rapid evolution. Manufacturers and distributors are struggling to give consumers what they want - when they want it. The name of the game is lean manufacturing - a term that has been coined for a process of increasing inventory turns, eliminating waste, and doing more with less in order to be in the right place at the right time.

While lean sounds streamlined, pared down, and hyper-efficient, it is not without its own hidden snags. Lean also means more frequent deliveries of goods in smaller quantities and the result is increas freight costs, in fact up to 25% increased freight costs which can be a substantial factor in product delivery and product pricing.

How can companies circumvent the already high and rapidly rising costs of transportation? The most logical approach is to move manufacturing and distribution to be closer to the customer base, but that isnt always possible. Experts suggest some less drastic measures to accomplish at least part of the same goal.

Some suppliers, for example, are shipping directly to stores, cutting out the distribution center in the middle. Particularly larger retailers and grocery chains are bypassing the distribution center thereby cutting out several steps that cost time and money, and consequently, freight costs. Alternatively, some companies are using a process called cross-docking which simply eliminates the storage aspect of going through a distribution center. When product arrives on one truck, it is immediately loaded onto another truck at the dock, instead of being received, put away, stored, labeled and then shipped on. Cross-docking is only possible when the distribution center has advanced notice of whats coming in and can effect transfers from one carrier to another immediately. Using milk run trucks (those that carry more than one product from more than one customer) can also provide a great way to get products to customers quickly and without additional cost.

Warehouse management systems are almost a must to sort out the logistics of todays supply chain and the benefits can be substantial for transportation as well. WMS software often utilizes transportation management systems to optimize the cubic footing and freight costs of shipments. Load sequencing and trailer cubing are practices that are also made possible through use of a warehouse management system.

Electronic data exchange facilitates sending out the advanced shipment notices that are necessary for cross-docking and other similar practices. It also helps reduce back orders and split shipments and makes the process of bundling (grouping orders and packages together when they are bound for the same ship-to address) much more viable.

Determining which method or combination of methods works best in a particular situation requires analysis of the companys distribution network and its strengths and weaknesses. Knowing where the bulk of a particular products customers are located allows the company to locate at a centralized location where those customers can best be served from. For example, Cincinnati, Chicago, and other middle of the country locations facilitate delivery to all parts of the country. Companies must identify where their transportation dollars are being spent in order to maximize them.

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