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Lean
- Load Leveling |
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Project |
Our client, an industrial manufacturer, requested analysis
of outbound shipment schedules and practices to discover
ways to improve service to its customers and cut logistics
costs. They supply to 10 major customers in 7 states, using
leased trucks, LTL carriers, courier services, and
airfreight. These customers often ran low on inventories
waiting on scheduled leased truck deliveries twice weekly.
Expensive expediting was often necessary to get desperately
needed product to customers when scheduled deliveries would
not arrive in time. Missing customer due dates was
commonplace. The objective of this project was to determine
if more frequently scheduled deliveries to all 10 major
customers could be accomplished economically to avoid build
delays |
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Approach |
Our approach
can be summarized as follows:
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We analyzed historical shipment data and freight
invoices at the part and package level using database
queries.
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We interviewed inventory and logistic personnel at both
our client and their customers to discover real world
behavior.
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We examined current lease contracts, carrier contracts
and negotiated discounts.
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We reviewed inventories and inventory policies in both
our client’s facility and their customers’ facilities.
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Lastly, we modeled several potential scenarios before
proposing level-loaded daily deliveries to all major
customers via LTL carriers to our client
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Results |
The results
were:
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Delivery – Regularly scheduled daily shipments
greatly reduce the waste associated with expediting
and the reputation loss of missing customer due
dates. The drum beat of each delivery is
predictable each day both in the supplying and
receiving facilities.
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Inventory – By cutting the replenishments time
between deliveries from 3 work days to 1 work day,
customers could trim their
safety stock by 2 days of product, and our
client could trim its
buffer
stock by an additional 2 days of product.
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Freight Cost – Leasing of trucks was abandoned in
favor of using LTL carriers. This resulted in
significant savings in trucking costs. Scheduled
daily deliveries resulted in less use of expensive
air freight.
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