The Role of Transportation in Supply Chains and Business

8

Also the more volume you bring to the table, guess what happens to the price? You should get a lower price, right? And accuracy and visibility should improve. That's called a core carrier program. How do you deal with time windows? You say, you know these customers, they have all these time windows I have to deal with. And a time window, if you're not familiar with it, it's a time when you have to show up after this time and you have to leave before this time. And the difference those two is called the time window. How do you deal with that? Okay, you can ask them to stay up. Okay, hold on. Okay, Laura, hold on with that one. That's right. You ask them to stay open later. Excellent. You show the cost and maybe you do a game sharing agreement with the customers. That phenomenon is called a customer service policy. You have a customer service policy. But if you don't understand yourself what it costs you to serve a certain time window, there's no way to deal with it. How about the number of countries that you deal with? You don't have to go into every country in the world. You can call that network rationalization. We have a client we're working with right now. It's a health and beauty aides company. They ship stuff all over the world and they are finally to the point where they can calculate the logistics cost of dealing in a certain country and based on that they'll know whether it's profitable to do business in that country. Because you get situations where the marketing and salespeople they want to go to every country. And on paper I guess you can say there's 28 people here who want to buy our product. Surely that's a good business. But if you calculate the cost of going into a country where the roads are difficult to navigate, where the lights in the airport don't stay on after 8 in the evening, where the telecommunications infrastructure is poor, etc. etc. and now the logistics cost as a percent of sales is 50%. Instead of 10 and you take that into account maybe you shouldn't be doing business in that country. That's called a network rationalization and we're starting to get that across with them. How about SKUs? Number of stock keeping units. This is an interesting one. Everybody gets this from an inventory standpoint. That more SKUs causes more inventory. What would more SKUs do to transportation? Does that have any impact on transportation? Yeah. As you spread more demand over more SKUs probably you're going to pay more per SKU from a transportation standpoint. It makes the packing more difficult. It makes the loading and unloading more difficult. So do you have to have all those SKUs? If you reduce SKUs what's that called? SKU rationalization. What we typically find when we go in with a client is about a third of the

The Role of Transportation in Supply Chains and Business | © RightChain Incorporated | All Rights Reserved