Profit margins are shrinking, and companies are running out of ways to cut costs to make up the difference. There’s little to be done about the costs of raw materials and goods, and production costs have been slashed as much as possible through automation systems. Inventories can’t be cut much more, as most companies are operating with only a few days of inventory on hand. This leaves transportation as the best place for companies to find ways to cut costs, according to at least one vice president of a supply chain, speaking anonymously to Supply Chain Digest.
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There are several ways companies are finding to cut costs within their transportation systems. First, many companies have stopped allowing suppliers to manage inbound freight. The old techniques allowed shippers to manage the freight shipping and simply bill the costs back to the company. Increasingly, companies are requiring shippers to use dynamic routing, which requires them to submit their shipping plans for approval and request a pickup time.
Secondly, there’s still a lot of room for companies to save with Transport Management Systems (TMS) and package materials designs. With the proper packaging designs, companies can get more freight packed per pallet, optimizing the number of containers that fit on a truck trailer, thereby lowering their overall shipping charges. Companies are also optimizing their shipping routes, and using electronic control systems to ensure the routing guides are properly followed.
Additionally, optimizing pallet builds allows more product to fit on a single pallet, increasing the number of pallets that fit on a trailer, and thereby further lowering the costs of shipping. According to the report by Supply Chain Digest, these are just a few of the ways companies are finding to lower transportation costs, even as diesel fuel charges continue to hover at about $3.90 per gallon. [/show_to]