Why Use A Freight Consolidation Centre
By Jonathan Johnson
Traditionally, vendors have taken on the task themselves organizing the logistics of moving goods to their retail customers. Over the years this approach has been more prone or vulnerable to flaws and unexpected or hidden costs. Moving from a Vendor Managed transportation arrangement to an outsourced Transportation Consolidation program can yield some remarkable benefits, you might not have expected. In addition, it makes the shipping process easier for the stakeholders in the supply chain.
More vendors or those responsible for the freight spend, are looking to consolidation centre programs to meet the retailer or purchaser demands.
Freight costs account for one of the largest expenditures in the supply chain. In seeking a solution, consolidation programs have been set up by service providers to improve efficiencies and manage the supply chain from start to end.
There are some common concerns shippers have which make the decision to consolidate freight easier or less burdensome.
Benefits of a Consolidation Program
- Mitigates Risk:
- In spite of the fact that there are many cutting-edge shipping solutions available today, damaged freight still remains a continuing concern. In addition to being more efficient, consolidation reduces the repetitive handling of the product by several different people, since the freight will only move from the shipper to the consolidation center, to the consignees. With fewer contact points, the risk of damaged goods is mitigated.
- Improved Quality Assurance:
- A benefit of consolidation is; it lowers the risk, which results in lower insurance premiums to the insured party.
- There is also improved accuracy in the tracking, forecasting and delivery dates of shipments.
- Consolidation allows you to perform quality control measures as soon as the product reaches the warehouse, which in turn reduces the chances of losing time and control due to unforeseen problems with your order.
- Results in improved customer service and key performance metrics
- Improves Vendor Compliance – thus results in reduction, or elimination of penalties
- Improves Inventory management – better service in the supply chain ensures the right product is available at the right time in the right place.
- Decreases time in transit.
- More Cost efficient:
- Many shippers regard this as the most important benefit of using a freight consolidation centre. If you only use half or two-thirds of a trailer, frequently you may still have to cover the cost for the remaining portion of the trailer which remains empty. With consolidation you have the privilege to combine multiple LTL shipments that are traveling in the same geographic location into one full truckload shipment. Meantime you are only paying for the space that your LTL freight occupies.
ASL recently launched a consolidation program for one of our major customers as a solution to their previous traditional LTL and vendor managed program, resulting in a genuine success story for this client partner.
Through our recent implementation on behalf of the customer, this process uncovered many non-compliance issues that were previously invisible or undetected buy the purchaser:
Issues such as:
- Floor loaded freight which was accepted by the transportation provider, and brought to the Deconsolidation centre, then palletized, at the distribution centre’s time and expense.
- Shipments not conforming to the DC’s standards including labeling, mixed Purchase Orders, insufficient shipment preparation / documentation, customs preparation , all needed to be resolved and corrected at the DC.
At the consolidation centre these issues were identified, pictures were communicated to the buyer and issues addressed to the vendors. Prior to the solution utilizing a consolidation Centre program, these issues, which significantly impacted the DC, were simply absorbed, and left undetected.
The Consolidation process ultimately is a win for the Vendors. Their freight when transported securely, segregated and labeled correctly, documentation and customs paperwork managed accurately, etc. works to a good end. Vendor products flow through quicker, more efficiently and in better shape to the shelves of the stores and into the customers shopping cart today, not tomorrow or even next week.