The transportation bandwagon

Controlling transportation costs has become a critical part of running your DC.

By Jim Apple -- Modern Materials Handling, 8/1/2006

Sometimes, as we are working hard to develop the very best layout and process for a distribution center, we get trumped by the team that is focusing on transportation. There seems to be bigger fish to catch in that pond!

In fact, with fuel costs rapidly rising and drivers' work rules tightening, looking for ways to reduce transportation costs is becoming even more important.

So, after we lose out on the spotlight enough times, we have decided that if we can't beat them, then we had better join them.

Just what can we do within the walls of the DC to help control transportation costs? Actually, there is plenty! We can:

• Stop shipping air. Examine outbound cartons as they are filled with dunnage and sealed. Dunnage is not free, nor is the cost of shipping a carton that is bigger, and heavier than necessary. Have you noticed that a very high percentage of consumer-direct shipments are made in bags? Low cube and low weight translate into lower shipping cost. Only for soft apparel products you say? With a little bubble wrap, even expensive electronics components are being shipped this way.

• Stop making unnecessary shipments. Making a replacement shipment due to a shipping error not only takes a lot of extra labor in the DC, but also incurs the cost of another small, expedited shipment—on our nickel! The error is also likely to create an extra shipment for the return.

Although our metrics may not penalize the DC crew for not shipping a product that is not in inventory, what if it is in an inbound trailer in the yard? Can we streamline the receiving process so that stranded inventory and the short shipments it causes goes away?

• Facilitate full truckloads. We can get more product on an outbound truck if we:

Slot products so that pickers can more easily build tall stable pallets.

Hand stack light products on top of shorter pallet loads to get us to the top of the truck.

Make the extra effort to pinwheel pallets, getting 15% more pallets on the truck.

We can even help with the cube utilization of inbound loads by designing an efficient carton receiving system that makes handling floor loaded shipments easier. Conveyorized single carton receiving is actually much more efficient than struggling with pallets that contain multiple SKUs.

• Ship on time. Falling behind on order processing and using premium freight to make up the time is great for UPS and FedEx, but it really kills our bottom line. We may need to revisit our peak processing capacity and our staffing plans to minimize this costly escape valve.

• Ship fewer cartons. Have you found it more efficient in the DC to ship separate cartons from each zone? Normally, this practice generates a number of partially filled cartons. Maybe it's time to consolidate them.

Unrealistic suggestions, you say? Many would add cost in the DC. In the old world of cheap transportation, you may be right. But today, and certainly tomorrow, we had better get used to doing some things in the DC that keep the cost of the whole supply chain in check.

It challenges us to develop new processes that help make the difficult a little easier.