Transportation Management Report 2011 - Capgemini

7
Because the form and shape of
a company’s value chain alters
almost daily, short- and mid-term
logistics planning becomes very
important. The planning of the
optimal distribution network is an
ongoing process that needs constant
attention. Many networks are set
up by tradition and over time may
need to be changed in order to fit a
more current situation. Distribution
network analysis makes sure that
warehouses and hubs are placed
in optimal locations and the use of
advanced software tools for daily
route planning helps shorten the
distances travelled to the customers.
Where to locate a split point or the
strategy behind FTL/LTL decisions
will influence distribution costs and
must be constantly monitored to
make sure they match the current
needs of the supply chain.
Consolidation of shipments is one of
the easiest ways to increase utilization
of trucks and lower emissions.
Keeping track of orders to suppliers
and consolidating customers’ orders
will reduce transportation costs
significantly over time. Transportation
and warehousing activities must
be in sync in order to consolidate
shipments and reduce inventory
levels. Therefore both transportation
and warehousing activities should be
aligned through common planning
processes.
The effects of careful logistics
planning will be even more powerful
if the planning is carried out together
with suppliers and customers. This
type of collaboration will make sure
that every part of the value chain
knows when to do what. The result
is a more visible and flexible supply
chain that is easier to manage.
A leading consumer electronics
producer introduced Collaborative
Planning, Forecasting and
Replenishment programs with several
customers, which increased forecast
accuracy to above 80% and reduced
stock levels in their distribution
network by more than 30%.
Selecting the appropriate mode
of transport
‘Going green’ often makes the costs
for transportation decrease. Choosing
sea transport from Asia instead of
air freight, or trading road transport
for railway or short sea can, in many
cases, lower the cost of transportation
significantly. Of course, in the case
of trading air freight for the much
slower sea alternative, it will affect
the amount of safety stock you need
to carry but maybe, in this time of
cost pressure and focus on green
issues, this should be part of the
consideration. The total logistics
cost is, of course, the thing to keep
in mind. By increasing competition
among suppliers and decreasing
their air volumes from 60% of total
freight volumes to 30% and shipping
the difference by sea, Ericsson, the
telecom company, expects to see a
40% reduction in their international
distribution costs.
Railway and intermodal transport
can help minimize the environmental
impact of transportation and can
cut costs if the distance is long
enough and reloading can be kept
to a minimum. Volvo Cars has
implemented a train solution for
their transportation of goods from
Germany to Sweden and have
lowered their transportation costs in
this area by 15% with just slightly
longer lead times.