Recently, customer requirements have become increasingly more challenging, particularly due to their experiences with same-day or next day deliveries of packages to their homes.
In response to ever-changing customer expectations, shippers are seeking any potential method that may improve the speed-to-market and accuracy of their shipments—all while lowering costs as much as possible.
To meet such demands, shippers are seeking partners and alliances to consolidate their freight—by combining less-than-truckload freight with other shippers, resulting in one truckload, rather than several small deliveries.
Among other positives, a successful partnership with a 3PL can (perhaps most importantly) help optimize your transportation spend and increase your bottom line. Here are 5 potential benefits, in particular, that can be realized through a freight consolidation program.
5 Benefits of Freight Consolidation
1. Improve Your Customers’ Satisfaction
As a shipper, you know how important it is for your customers to receive their items as quickly and cost efficiently as possible. They expect you to not only handle their freight responsibly, but also deliver it within their guidelines.
To reduce your exposure to claims, improve your productivity and decrease your own expenditures, a freight consolidation program can help to bundle multiple shipments into fewer trucks. Not only will fewer trucks bump your customers’ docks as a result, but you will also significantly diminish the administrative work of managing delivery appointments, while also increasing the efficiency of unloading.
2. Increase Consistency in Your Supply Chain
As you consolidate your shipments, you need to look for any potential patterns and repetitive orders from your clients. Once you have identified such patterns and orders, they should become a part of your consolidation plan.
“A consolidation plan drives order and consistency to your shipping schedule, enabling you to plan and communicate effectively to your customer with an understanding that your weekly variability is reduced through leveraging the scale of multiple shippers.,” says Dave Giblin, Vice President of Operations, ODW Logistics.
Such scheduling will not only increase your supply chain’s consistency but also diminish the odds of late shipments, product misplacement and your customers’ potential dissatisfaction when you do not provide the goods and services they need.
3. Take Advantage of Relationship Synergies
Volume. Product mix. Seasonality. Buyers. These are just a few of the items that will impact your financial figures on a short- and long-term basis.
“By partnering with a 3PL, you can take advantage of any potential relationship synergy,” Giblin says. “You must ensure your 3PL understands your transportation goals and has the technology and infrastructure required to deliver you savings through a freight consolidation program. While consolidation may not be rocket science, there are many moving parts to manage. A lack of investment in people, technology, tools or continuous process improvements will be exposed immediately, as a result.”
4. Achieve Scale and Cost savings
If your company is mid-sized (or smaller), you understand just how challenging it is to reach whichever shipping volumes are necessary for you to achieve scale and cost savings. However, these potential challenges can be alleviated considerably by leveraging your transportation costs with other companies in network and pooling shipments together, thereby maximizing your cost savings.
5. Ship smarter and maintain your relationships
To ship efficiently, a primary goal is to maximize the cube and weight of a trailer. By collaborating, you drastically increase your opportunity to more efficiently use the space of the trailer. If you ship ping pong balls, and a company down the street ships golf balls, imagine the opportunity you have to collaborate to build better loads. This analogy can apply to any companies that ship less than truckload freight, regardless of their industries.
To experience the benefits firsthand, you will still need people with engineering minds who can determine the best plan for you. Most 3PLs have a Transportation Management System to schedule your transportation, but, like most industries, technology can only get you so far. You need the expertise of a proven team to navigate your particular needs, match those with the needs of other clients and deliver successful consolidation plans that can be executed to your customer’s satisfaction.