At A Glance
Challenge: Work with 3PL to optimize supply chain network for its existing client
Solution:
- Performed network analysis,
- Created optimization strategy,
- Helped redefine the logistics service agreement and transportation pricing
Overview and Challenge:
Tompkins was retained by a leading 3rd party logistics services provider (3PL) to develop a distribution strategy for one of its primary clients – an agricultural and construction equipment manufacturer.
The challenge was to optimize the supply chain network and reduce costs to create a “win-win” solution for both the 3PL and its client, taking into account that the client-3PL relationship has existed for nearly 20 years.
No formal optimization and supply chain network review had been conducted in many years, and the network had spun itself into a web of various lanes, modes, carriers, cross-docks, service levels and costs. Even though it worked well, transportation was very inflexible, opaque, people-dependent and expensive.
To optimize the overall supply chain, the study focused on the manufacturing client’s current network and North American facilities. The client’s supply chain involved more than 4,500 dealers being serviced from 16 depots located throughout the U.S. and Canada. The 3PL managed northbound (U.S. to Canada), southbound and intra-Canada transportation aspects, as well as several cross-dock facilities, at an estimated revenue of about $12 million.
Solution:
Tompkins worked with the 3PL and its client to validate an existing network optimization model against current baseline cross-dock locations and distribution points, transportation processes, costs and performance by lane and mode, current and future volume growth, service level expectations, and many other applicable constraints.
A detailed sensitivity analysis of the distribution strategy provided a deeper understanding of various alternatives to all of the supply chain partners. Tompkins recommended an integrated approach with a redefined logistics service agreement and transportation pricing.
The solution recommended by Tompkins included:
- Transaction-level visibility through IT systems implementation
- Tactical transportation initiatives toward line haul consolidations
- Zone skipping
- Back haul opportunities
- Leveraging freight buy
- Consolidating last-mile deliveries
For the next phase of the project, the 3PL asked Tompkins to develop a multi-modal transportation pricing matrix for the same agricultural and construction equipment manufacturer. The pricing needed to incorporate flexibility so that either lane-level transportation rates or freight rates by each segment could be applied. Tompkins designed a pricing matrix to ensure savings for the client as well as for the 3PL.
The Results:
The 3PL was able to prepare a rate proposal that would enable them to retain a valuable client and open up the possibilities for expanded services.
“One of the biggest reasons we went with Jillamy is the multiple checks from start to finish. The WMS makes it really hard to send out the wrong product. Before we implemented ShipBob’s WMS, our order accuracy rate was around 92%. Now we’re at 99.7% for order accuracy, which equates to 2,100 less misspeaks a year on average.” Jourdan Davis, Operations Manager at Pit Viper
