Transportation | Warehouse Optimization
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WASTEFUL ORDER MANAGEMENT PRACTICES MUST BE ELIMINATED Most companies don’t want to admit it, but a certain number of their shipments are unnecessary. We know there is a 2-5% savings that can be generated by improving order- management practices. Surely, nobody ships a load when they don’t need to. But consider the case of a company with a distribution center in Chicago, the plant located in New Jersey, and a customer in Detroit. When the customer places an order, that order is immediately sent to the Chicago distribution center that serves the Detroit area. But what if the entire product on the order is manufactured in New Jersey? Almost all order management systems would send the order to Chicago and have it shipped from there. So in the case of a full-truckload shipment, the truck would have gone from New Jersey to Chicago and then back to Detroit. Wasteful indeed! Order management systems need intelligence. That intelligence needs to look at each order and determine, based on freight cost, inventory availability, lead-times, and capability etc., the best ship-point. This logic, developed by Transportation | Warehouse Optimization (www.warehouseoptimization.com) is called AutoSPO – Automatic Ship- Point Optimization. AutoSPO is designed to do on an-order-by-order basis what a network optimization tool like Llamasoft does tactically or strategically: determine where the order should originate given existing freight rates, current inventory positions, site capability, and lead time. Also, AutoSPO has the capability of creating “immediate-replenishment-stock-transfer orders” to position inventory that it may need to meet a specific shipment. Where can this best be employed? Here are some examples: Where like products are being made in multiple plants Where like products are stored in distribution centers serviced by multiple plants Where there are options for the ship points such as back storerooms, fulfillment centers, or vendor direct Implementing AutoSPO generates a 2-5% improvement in supply chain costs. And it does this by eliminating unnecessary freight movements in an otherwise well-designed supply chain.
Transcript of Transportation | Warehouse Optimization
WASTEFUL ORDER MANAGEMENT PRACTICES MUST
BE ELIMINATED
Most companies don’t want to admit it, but a certain number of their shipments are unnecessary. We know there is a 2-5% savings that can be generated by improving order-management practices. Surely, nobody ships a load when they don’t need to. But consider the case of a company with a distribution center in Chicago, the plant located in New Jersey, and a customer in Detroit. When the customer places an order, that order is immediately sent to the Chicago distribution center that serves the Detroit area. But what if the entire product on the order is manufactured in New Jersey? Almost all order management systems would send the order to Chicago and have it shipped from there. So in the case of a full-truckload shipment, the truck would have gone from New Jersey to Chicago and then back to Detroit. Wasteful indeed! Order management systems need intelligence. That
intelligence needs to look at each order and determine, based on freight cost, inventory availability, lead-times, and capability etc., the best ship-point. This logic, developed by Transportation | Warehouse Optimization (www.warehouseoptimization.com) is called AutoSPO – Automatic Ship-
Point Optimization. AutoSPO is designed to do on an-order-by-order basis what a network optimization tool like Llamasoft does tactically or strategically: determine where the order should originate given existing freight rates, current inventory positions, site capability, and lead time. Also, AutoSPO has the capability of creating “immediate-replenishment-stock-transfer orders” to position inventory that it may need to meet a specific shipment. Where can this best be employed? Here are some examples:
Where like products are being made in multiple plants
Where like products are stored in distribution centers serviced by multiple plants
Where there are options for the ship points such as back storerooms, fulfillment centers, or vendor direct
Implementing AutoSPO generates a 2-5% improvement in supply chain costs. And it does this by
eliminating unnecessary freight movements in an otherwise well-designed supply chain.
