A couple of months ago, Walmart reported in its 2012 Global Responsibility Report that it had improved the efficiency of its fleet by 69 percent compared to its 2005 baseline (see my April 25th posting, “How Walmart Improved Fleet Efficiency by 69 Percent”). The company delivered 65 million more cases, while driving 28 million fewer miles, by increasing its pallets per trailer and better managing routes. Walmart also reported success in reducing empty backhauls, specifically in Mexico. “Our focus on backhauls,” the company reported, “saved more than 56,000 trips” last year.
Maximizing trailer capacity utilization and reducing empty backhauls are two “low hanging fruit” opportunities to reduce transportation costs that still remain on the tree for many companies. If you haven’t worked to improve your performance on these metrics lately — or worse, you don’t even measure and track these metrics — then you need to put this on your priority list now. Here are a few recommendations for getting started.
- Before anything else, make sure your data is accurate. You have a trailer and you have some product that you need to load into it. How hard can this be? But as anyone who has tried to load up a minivan with suitcases and stuff for a family-of-six vacation can tell you, there’s actually a lot of complexity in doing this right. You have to take all sorts of factors into consideration, such as conveyance type (cases, pallets, drums, rods, etc.), weights, dimensions, densities, stackability constraints, compatibility constraints, and so on. You must have accurate data for all these factors before you can effectively use any load optimization technology. Otherwise, you’ll find yourself in a “garbage in, garbage out” situation.
- Establish your baseline. What percent of your trailers are loaded to maximum weight capacity? What is the typical delta between loaded weight and maximum capacity? How does this data differ by lane or product type? Spend some time at the loading dock and observe the trailer loading process. Is there a lot of wasted space in the trailers? Does the loading process make sense to you? If not, ask the associates to explain why they do it that way.
- Forget about using a spreadsheet; invest in a TMS and load optimization technology. Simply put, with so many factors involved, an Excel macro is just not going to cut it. And why bother when there are existing, off-the-shelf solutions (with 3D graphical interfaces) that specialize in load optimization. Make sure the solution is capable of modeling the different conveyances you use and takes into account stackability, compatibility, and other types of constraints related to your products.
- Rethink your packaging design and materials. Yes, there is a link between between smarter packaging (smaller, lighter, better stacking) and transportation savings. By making package design changes, sometimes even small ones, you can potentially fit more products per case, more cases per pallet, and more pallets per trailer, thus increasing trailer capacity utilization and reducing the number of shipments you make.
- Break down the barriers between inbound and outbound, private fleet and common carriers. We all know it happens: your private fleet comes back empty from an outbound delivery while a common carrier follows behind with inbound goods. Or a common carrier makes an inbound delivery and heads out empty, while another truck (perhaps from the same carrier) heads out in the same direction loaded with outbound goods. Optimizing inbound separately from outbound, and your private fleet separately from common carriers, is what leads to empty miles. Technology constraints used to prevent companies from truly taking an integrated approach to transportation optimization, but with today’s more advanced transportation management systems, that is no longer the case.
- Collaborate with other shippers and 3PL partners to leverage each other’s networks. Everyone knows that “collaborative shipping” offers great opportunities to reduce empty miles and improve the overall efficiency of transportation networks. Putting this concept into practice, however, hasn’t been easy. As I have mentioned before, I believe that 3PLs (or another type of third party) need to be involved in these shared networks, not only to engineer the solution, but also to manage the day-to-day operations. I also believe that many 3PLs are eager to play a role. But this will only work if 3PLs and shippers transform the way they currently work together.
These low-hanging fruit opportunities to save transportation costs are ripe and ready for picking. You just have to reach for them.
(Editor’s Note: A version of this posting originally appeared as a guest commentary on CH Robinson’s Transportfolio blog. CH Robinson is a Logistics Viewpoints sponsor).