05 Sep What If You Could Reduce Transportation Costs By As Much As 35 Percent?
Transportation expenses are a significant part of supply chain costs. Unfortunately, they’re also one of the most difficult variables to optimize.
Cost-efficient transportation relies on each supply chain vendor to route inventory along optimal distribution routes, but in our era of globalized supply chains, optimized shipping is not always feasible. Multi-party workflows can be complex and variable, with too many factors at play to make the best decision possible—or even visible.
Actively Managed Inventory
The high costs of transportation in the supply chain are a result of inadequate management processes from both vendors and manufacturing enterprises themselves. According to research released by Tungsten Network, 30 percent of businesses surveyed reported a loss of revenue or business partners as a result of inefficient supplier management. And data from a 2017 MPI Distribution & Logistics report shows that only 53 percent of distribution centers and warehouses have continuous improvement programs in place. To prevent the loss of revenue that accompanies poor supply chain management, businesses need a new system of interacting with each of their vendors that guarantee efficiency and quality across the board.
The IOD Advantage
This is where Inventory On Demand (IOD) enters the picture. IOD is a new system of managing multiparty supply chains that builds on supply chain infrastructure already in place. In many ways, IOD is the natural evolution of traditional Vendor Managed Inventory (VMI) workflows. The difference is that IOD does not leave inventory management in the hands of each vendor.
IOD works by transferring ownership of inventory to a single, third-party provider, which also manages its flow throughout each leg of the supply chain. IOD providers use this system of inventory control alongside strategically-located distribution hubs to route inventory along optimized distribution channels and provide same-day fulfillment for each customer order. This method of active inventory management results in reduced costs, increased working capital, and accelerated revenue growth—and can reduce a supply chain’s transportation costs by as much as 35 percent.
End-to-End Supply Chain Control
By giving a single entity ownership of all inventory, executives gain an end-to-end view of supply chain operations. This comprehensive perspective helps operators identify the areas of their supply chains most in need of optimization, resulting in supply chains that are leaner, more efficient, and more profitable across the board.
Reducing transportation costs is only the beginning—through IOD services, businesses can speed up supply chain responsiveness, defer costs of inventory ownership, and minimize risk while improving the reliability of their transportation channels. These benefits, among others, are the true source of IOD’s competitive advantage, and are critical for operators who are interested in getting more value out of their supply chains.
Allow our team of optimization engineers to perform a free analysis of your supply chain. Click here to request yours today.