Transportation is the most significant part of supply chain costs. Lower freight costs for customer shipments is the “holy grail” of consumer product and other supply chains. But there is a way that companies like Procter & Gamble (P&G) have proven. P&G reported in a conference that they had converted the unstructured, non-repeatable processes of picking and loading into a repeatable process. By doing this, P&G encouraged customers to order more products (i.e., a larger shipment size) to receive the “best price” on the product.
The repeatable process to lower freight costs
Creating a repeatable process is no slam dunk. However, such a process must be software driven and sufficiently flexible to handle customer-specific requirements and many variables inside and outside the shipping facility.
Procter & Gamble chose AutoO₂ from Transportation | Warehouse Optimization
to drive repeatable picking and loading. With this in place across its network, P&G was able to adjust the price book and allow its customers to determine how they want to order. As you may guess, customers responded by ordering more products – driving up shipment size and generating overall reduced supply-chain costs. And because freight is the most significant component of the total cost, the savings were enormous.
P&G received other benefits
AutoO₂ generates savings by:
- Increasing case pick productivity by 17.5%
- Cutting the learning curve for new staff from more than four weeks to well under a week.
Savings can be up to $1,600 per new hire. For example, pickers do not need to learn each product’s or family’s strength or stability; loaders can learn the different loading patterns based on order composition, state-specific-axle-weight restrictions, etc.
- Eliminated 75% of warehouse case damage
- Cut reloads 85%, saving more than $30/trailer in direct labor and much more by preventing disruptions.
Lower freight shipping costs with load building optimization AutoO₂
Some savings obtained by using AutoO₂ are harder to quantify:
- Ensuring customer requirements are met. Pick and load staff do not need to memorize the customer rules and keep up-to-date with changes – AutoO₂ does this for them
- Optimizing in-warehouse processes, such as automatic layer pick or ASRS warehouses, to incorporate the local constraints.
- Getting everything on the truck while meeting the constraints of zones that prevent combining certain items.
- Providing the best path calculation. Notice this doesn’t say “shortest path” AutoO₂ provides the optimal path to pick and load, understanding the importance of damage reduction and stack-ability of the resultant pallet.
AutoO₂ has many pallet and truck loading features to correspond to customers’ requirements and expectations. Its development and support teams are agile and flexible, enabling new functionality to be delivered quickly, reliably, and cheaply.
In conclusion, using AutoO₂ for case picking and truck loading lowers freight and logistic costs.
Additionally, it decreases the onboarding period for newly hired employees. Moreover, loading every truck as fully as possible (by applicable laws and rules) reduces the carbon footprint and landfill waste caused by damage and improves the company’s sustainability.