September 14 2023 | 10 Min Read

Situation Files #6: Busting counter-productive habits

Posted By
Wendy Mackenzie
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Situation Files #6: Busting counter-productive habits

How we identified two key changes that could save a company $150k per year on freight spend

Picture an office partition manufacturer. It’s a lean but energetic company, as busy as it gets, moving heavy and specialized equipment across the US. They’re running an elaborate production line. Just a few small manufacturing delays can quickly add up to big shipping delays, big freight spend increases, and bigger customer service problems. Their reputation is hard to build, easy to lose: everything hinges on keeping up with customers’ fast and inflexible construction timelines. This is a company whose success relies on efficient and steadfastly bankable freight.

There’s the setup. Now here’s where it gets snaggly.

Something wasn’t quite right.

They were losing money on freight hand over fist. How much, exactly? They couldn’t quantify. What to do about it? They weren’t sure. All they really knew was that their freight operation seemed to be locked into a way of doing things that wasn’t working.

Welcome to Situation File 6! Today, we’ll show you how IL2000 used accurate data and expert industry insights to bust a company out of supply chain inertia. Along the way, we’d implement changes that’d save them roughly $150k per year on freight.

The upshot

  • Two habitual supply chain practices identified and replaced
  • $150k in yearly freight spend savings
  • A clearer path to continuous supply chain improvement

The sitch

Office partitions are big. Making them is complex. To get around the dual complications of bigness and complexification (not a real word) this company used drop trailers — lots and lots of drop trailers. Almost exclusively. From the first day we started working with these folks, they were adamant that they needed to pay a premium for the added flexibility of drop trailer pickups. And quite a hefty premium it was!

To be fair, it’s worth noting that this had been a logical approach for the company.

They’d worked out of a smaller warehouse for some time. Added to that, they’d experienced a handful of entrenched production line difficulties in the past. Drop trailers had, historically at least, offered an effective workaround. The company had long since successfully resolved these underlying problems, but still,  they couldn’t seem to shake that drop trailer dependence. They needed a way to gain insight into operations on a regular basis and know when to act and how.

Stick a pin in that idea because it’s about to get more complicated.

The company was also heavily dependent on one high-cost nationwide carrier for its shipments. This carrier was far, far, far from the most competitive option for much of the company’s freight operation. They were convenient, however. Moreover, they were a known entity. As so often happens with busy supply chains, managers had gradually spurned careful carrier selection in favor of pure, unbridled expediency.

So the sitch, in brief, was that this company’s supply chain had skeletons in its cupboard, all impacting their ability to take an objective view of freight spend management. Two wildly inefficient supply chain practices had become hard-baked into this company’s freight operation, like burnt cheese on a cast iron skillet. 

Discordantly mismatching analogies aside, let’s look at the underlying causes.

The roots of this situation were burrowed deep into the COVID-19 pandemic. The Great Resignation and ensuing labor shortages had depleted the company’s freight operation of corporate history. The ongoing legacy of that skills drain (not to mention their demanding manufacturing schedule and industry-wide transportation volatility) had left their supply chain under-resourced and guided by reactive decision-making, and not the real-time, data-driven resources needed to advance.

No clear line of decisions had taken them down this path, but it would take a clear line of decisions to backtrack and fix their shipping cost.

In the meantime, their freight efficiency was shot.

No one quite knew how they got there. Everyone knew it needed fixing.

What was going wrong?

  • Amnesia: Pure and simple, the company had experienced a prolonged bout of brain drain. Too many people had come and gone, leaving a relatively new freight team lumbered with the legacy of past supply chain decisions.
  • Inertia: Drop trailers and one high-cost carrier had become a fixed decision point. Altering that course would require energy and time, and they were dealing with a deficit in both.
  • Myopia: The company just lacked the data to know the scale of the problem. A practical solution would remain blurry and indistinct until they were able to quantify the magnitude of wasted money.

The solve

The odd thing about a situation like this is that everyone knows they’re doing it wrong — or shall we say, sub-optimally. But knowing something is wrong isn’t the same as knowing how to fix it. The company didn’t have time or people to gather that data.

We had both.

So we went out and pitched different carriers. Options were balanced, potential deals floated. Within a short time, we came back with clear and accurate data on other carriers — not just what they charged but how they operated. We gave the company a solid baseline from which to accurately compare their options and make smart decisions.

But it wasn’t just about gathering pricing data and balancing carrier capabilities. It was also about insight and leverage.

IL2000 was able to look at the situation from 30,000 feet, as it were, comparing this company’s freight operation with those faced by our many other clients. That perspective shed valuable insight into which carriers historically performed better in their locale and with their kind of freight. Crucially, we could point to other equivalent company experiences to prove that drop trailers were no longer a necessary part of their outbound equation.

We also had buying power they lacked; we could negotiate far better rates than they’d secure by going it alone. Moreover, we had “ins” with carriers — contacts we could approach with hyper-granular questions about their particular freight, their specific challenges.

As a company dealing with these challenges, they couldn’t just pick up the phone or bang out an email cold and expect a highly targeted response. We could. 

All these unique value-adds culminated in one of many quarterly business reviews. We presented our findings, quantified their problem, and — most importantly — presented an achievable change strategy.

We also gave them a number: $150,000. That was the amount they were losing each year on inefficient freight decisions.

It was those three things — solid proof, reliability borne of comparable experience and a hard number — that galvanized the company’s commitment to throw out the busted stuff and find a better way forward.

Within 48 hours of that presentation, the company had stepped away from the drop trailers. Their habit of single-carrier dependence was out the window. We swiftly equipped them with a crew of steadfast freight service carriers who were primed to keep their shipments moving at highly competitive rates.

It kept getting better too.

Within a few months, they were reassessing their TL-to-LTL ratio and had a daily dialog with IL2000 about next steps. They trusted us, and we rewarded that trust with solutions that’d keep their freight operation growing and evolving.

What went right?

  • Knowledge and experience: The company couldn’t look at its problem and see a clear way to fix it. They felt their processes were entrenched. We were able to help them navigate a way through it.
  • Connections: We equipped the company with an inside track. Better rates, sure, but also carriers with the company’s shipping priorities prominent on their respective radars. Responsiveness = everything a bit easier.
  • Proof: We presented this company with accurate data on exactly how much they were losing on freight. Seeing that on paper was compelling. We offered hard facts and drew a straight and practical line to a proportionate solution.

The take home

At the end of the day, the take-home here is simple: Sometimes, you need an experienced guide.

If your supply chain decisions feel clouded, if you feel you lack the data to un-cloud them, if you’re struggling to see how your freight operation needs to grow, then talk to IL2000. Our business intelligence tools and extended experience are at your disposal. Let’s connect and discuss how IL2000 can help you find your way.

 

Topics: Pricing, Transportation Models, Supply Chain Management, Freight Costs

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