The Logistics Challenge:
Suppliers weren't shipping material on a consistent basis and preferred not to be in charge of finding carriers and making shipping decisions. The customer - a manufacturer of mining equipment, dump trucks, and tractor equipment - needed logistics solutions that would allow it to focus on creating product for its customers and less time on logistics planning.
To add to these challenges, the material planning team didn't know when material was arriving. With no visibility to inbound loads and unleveled volume, the dock couldn't plan its day and suffered from insufficient manpower. The customer had large minimum order quantities on parts that caused five + weeks of material to be ordered, driving instability into the inbound volume. Supplier packaging information wasn't readily available, and suppliers called in their own carriers which resulted in poor service levels and no accountability to damage or late arrivals.
Current state metrics included: supplier fulfillment rate, dock lift volume stability, transportation spend, dynamic load changes, and dedicated carrier lane assignment %.
The customer partnered with LeanCor to develop custom logistics solutions that would solve these problems. They built a future state vision with a repeatable network design that would balance transportation cost with supplier, carrier, and dock stability.
As part of its logistics solutions, the customer asked LeanCor to build a stable network that would give the suppliers and carriers static appointment times for pickup as well as delivery to the dock. Their goal was to reduce on-hand inventory. They also wanted to remove dynamic adjustments from the plan to prioritize stability or over transportation costs.
The Logistics Solutions:
LeanCor engineers looked at ordering patterns of all of raw materials to identify opportunities to reduce lot size and level order volumes. They then gathered packaging data by part number to turn orders into size and weight projections. LeanCor performed a mode analysis to understand what suppliers should be shipping LTL from truckload. Then, adjusted supplier shipping frequency and utilized milk runs to balance volume across the week as well as throughout the day to each inbound dock. Finally, they worked to assign dedicated carriers to more stable routes, ensuring consistent performance.
Future state metrics would now include: carrier pickup and delivery performance to plan, supplier ship performance to plan, % of material on dedicated truckloads, cost per pound, dock volume by hour, plan vs. actual cost metrics.
LeanCor was able to give every supplier a standard shipping schedule with at least one pickup per week. They were able to negotiate lower carrier rates and better performance by assigning dedicated carriers to over 40% of lanes. The customer benefited from daily visibility of leveled flow to the dock to improve worker efficiency. In addition, they were able to reduce on-hand inventory through increased velocity of inbound orders through lot size analysis.
As a result of these logistics solutions, the customer realized:
- More than 10% reduction in transportation cost,
- Carrier pickup and delivery performance of over 90% to within one hour of appointment time
- Increased stability of dock volume, and
- 20% increase in supplier shipping performance.
Posted by LeanCor Supply Chain Group
LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.Facebook LinkedIn Twitter Google+