Save 6-14% on Transportation Costs

This article comes from the June 2008 Supply Chain Link newsletter.

You can not turn on a TV, attend a meeting, or have dinner with your family without hearing about the state of the U.S. economy. And the news is not positive. The economy is faced with multiple factors pressuring its decline: the bursting of the housing bubble, ever increasing energy costs, a weak U.S. dollar, rising food cost, and higher unemployment. And that is just in the consumer market. Industry production levels are leveling off or dropping as well. Twelve of 27 industries were below production levels from a year ago. The worst hit industry has been the equipment industry. In fact, last quarter the equipment industry’s sales decline 12 percent.

Overcoming Transportation Challenges

A slowed economy may present various challenges for you to contend with. The decreased amount of consumer spending has been linked with less production and therefore less shipping. Also, the rise of energy cost has prompted some companies to increase transportation cost. This may have a ripple effect, including perhaps moving some production back to the Western Hemisphere where transportation cost and transit times would be reduced. An obstacle for carriers will be balancing their rising cost with competitive rates in a buyers’ market. Lastly, the growing amount of exports will come with the need for international knowledge and understanding to be successful.

Prepare for the End to the Economic Slowdown

The good news is experts are predicting that by 2009 a slow economic turn around will start. The housing market will be on the mend and industry production is expected to increase. The weak U.S. dollar may be the one to thank for the turn around. There is action you can take now to help your business stay afloat during the economic crunch.

Invest in technology

Now is the time to focus on your company and ways to improve your internal processes. For example, partnering with a 3PL’s TMS would allow you to use the expensive supply chain technology at a fraction of the cost while cutting man hours and costs associated with load planning and optimization setting you up for a higher profit margin coming out of the recession. Also, technology will give you a leg up on the competition that may have used a retrenchment strategy during the recession.

Improve your Processes

The economic slowdown may also leave you with extra time to spend improving your processes. This may be the right time to analyze your distribution center locations, reverse routes, or parcel contracts. A 3PL who has the expertise to do these things would become a strategic partner during this time. They may be able reduce your cost and add value to your supply chain. While pinching pennies is always a wise strategy, don’t let the fear of recession cause you to concentrate on cutting to the bare bones and lose sight of your business goals.

Results with Transportation Logistics

GENCO Supply Chain Solutions’ Transportation Logistics division can be utilized to help you drive down cost during this recession. On average customers who use our transportation management solution save 6% to 14% of their transportation budget. Then following implementation of our solutions, we have a program that assists customers, suppliers and carriers to insure smooth implementation of any new or changed services. These services may include routing guide requirements, service standards, manifesting, billing, carrier payment, service audit and supplier/carrier compliance monitoring. We can also track the implementation on a Web-based project management tool and provide weekly reports on event status.

GENCO Supply Chain Solutions also provides network studies to pinpoint areas of wasted space or inefficient use of funds on routes. Our parcel negotiation and audit division also provides savings up to 14% of your parcel spend. With one or a combination of solutions, we can help lower your bottom line to survive this recession and come out of it better than when you came in.