Flatbed Trucking Freight Savings - Sky Light Manufacturer Case Study
Client is a leading manufacturer of commercial and residential sky lights. DSi provided a freight cost assessment by creating a database model of all freight invoices for the period of June 2004. Five hundred and thirty (530) invoices surveyed revealed a one month spend of $90,553 in both less than truckload and flatbed truckload shipping requirements. Flatbed truckload carriers were typically used for job site deliveries to construction sites. Typically the client's customers for job site deliveries were construction contractors.
Annual projections made using initial one month sample projected 6,360 invoices and $1,086,630 in total spend. These numbers were verified against the clients P&L statements to insure an accurate sample and an accurate projected annual expense. Approximately 72% of the expenditure was with less than truckload carriers and the balance of 28% of freight spend was with flatbed truckload carriers.
Benchmark costs were established using equivalent discounts for LTL and historical costs per mile for flatbed truckload. Interviews and discussions with appropriate client personnel about required SOP's ( standard operating procedures) and required business rules were conducted. The resultant business rules were incorporated into a bid package used to negotiate a "Core Carrier" program for this client.
Eighteen (18) qualified LTL carriers consisting of both incumbent and non serving LTL carriers were invited to bid on annual contracts through an RFP (Request for Proposal) process conducted by DSi. All non serving carriers were screened to insure that identified business rules and requirements could be met or exceeded.
DSi presented bid results to the client by way of an "Impact Study". This study applied all bidding carrier's proposed rates to the one month (June 2004) historical invoices. Through this process a comparison of total one month and projected annual expenditure by each bidding carrier vs. historical one month and projected annual expenditure was demonstrated.
DSi proposed a "Core Carrier" program which would see three LTL carriers objectively handling all available shipping requirements for the client. A regional/local LTL carrier and two national LTL carriers where awarded contracts. Route Guides were established to insure program compliance.
DSi leveraged flatbed trucking requirements through its logistics division DSI Freightways, LLC. After surveying DSI Freightways' database of flatbed trucking carriers, interviews and discussions were conducted with all flatbed trucking carriers that could meet or exceed established business rules for available business.
A "Core Carrier" group of flatbed trucking carriers was established to serve the clients needs. DSi's on-line TMS (transportation management system) was used to facilitate all communications, dispatch, tracking & tracing thereby insuring timely job site deliveries and coordination of on site rigging requirements. Through this communications protocol charge backs to the client as invoiced by the contractors for on site rigging not utilized were eliminated.
Prior to DSi's relationship with the client, the client had an historical claims incidence of 1.699% ( for every 100 shipments 1.699 freight claims where filed) The majority of all claims came from LTL shipments, where sky lights were handled through a typical LTL trucking carrier break bulk system requiring shipments be loaded and off loaded a number of times before final delivery.
An on site demonstration of proper handling techniques to reduce or eliminate damage was coordinated for all serving carriers. Local terminal managers and operations personnel attending were required to communicate and coordinated the implementation of these proper handling techniques through their systems. A target claims incidence of .575% was established as a measurement of claims incidence reduction.
DSi's freight audit, freight payment and management reporting was utilized to monitor and measure program performance.
Through the implementation of DSi's services the following documented savings for a three year period were delivered to the client:
1. Direct Freight Cost Reduction: $624,044
2. Freight Audit Error Recovery: $103,559
3. Fuel Surcharge Savings: $103,132
4. LTL General Rate Increase ( GRI) Savings: $117,459
Total 3 Year Itemized Savings: $948,194
First year claims incidence was measure at .735%. Second year claims incidence was measured at .615%. Third year claims incidence was measured at .556%
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