This is the story of one Massachusetts company - a leading manufacturer of woven jacquard fabrics for the high-end home furnishing industry - whose shrewd assessment of how they got their product from one place to another generated a seven-figure cost reduction.
In addition to manufacturing fabrics for the high-end home furnishing industry, this company held additional contract fabric lines selling to automotive interior, office furniture, wall coverings, and freestanding panel manufacturers. Highly sought for its automotive interior fabric line, the Massachusetts company was bought by a larger Michigan based fabrics producer whose business plan dictated that they concentrate solely on automotive fabrics.
These kinds of mergers usually produce redundant operating systems, and this one was no exception. The Michigan-based company maintained a private fleet that served much of the company's distribution and supply chain needs and also procured and managed the company's purchased transportation requirements. The Massachusetts company asked DSi to assess their current logistics and supply chain requirements and costs.
DSi's assessment uncovered an inefficient and costly transportation system in which intra-plant shuttle activity was set up on a time schedule, rather than being tied to peak production periods. Basically, the trucks weren't going out with full loads and the company was losing money.
This money-losing process was developed for two well-meaning reasons: 1) to insure that looms and weaving facilities were supplied with dyed yarns and 2) to insure that finishing plans had woven fabrics within hours-regardless of available quantities. As a short run producer, the resulting constant set-up and takedown of beams for loom operations and return of fabric racks required same-day deliveries on 53-foot trailers that were loaded with small quantities of product.
"Just-in-Time" to the Rescue
Working with the company, DSi carefully plotted production schedules and material requirements for those production schedules. DSi's goal: To design, develop, and coordinate a just-in-time shuttle schedule that would reduce transportation cost inefficiencies.
Just-in-time is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs. The philosophy of JIT is simple: Inventory is waste. JIT focuses on having "the right material, at the right time, at the right place, in the exact amount" - without the safety net of inventory.
The subsequent schedule eliminated duplicate runs for materials and dunnage not required by each specific plant's production schedules. In further discussions with the transportation firm, DSi negotiated truckload and half truckload (LTL transportation) pricing for deliveries that required the company to ship smaller quantities and allowed the shuttle company to more closely match their equipment capacities with the fabric company's load requirements.
With the combination of DSi's leveraged and professionally conducted formal RFP processes, aggressive freight audit error recovery, just-in-time scheduling and optimization of truckload and LTL transportation, our client achieved first-year savings of $1,408.540.