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Situation
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Most freight rates secured by this customer prior to involvement with AMG were very
competitive. However, the quality of the client's freight data was poor (e.g.
missing shipment weights, incorrect 'Ship To' information, illogical rates, omission of critical tracking data such as bill of
lading number, etc.)
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Since the client's transportation strategies were based on
inaccurate freight data, erroneous assumptions were leading to poor transportation decisions
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Lack of focus on Cost Per Hundred Weight (CWT) measures
lead our client's management team to believe that freight costs had been trending downward, when they had actually been
trending up
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Freight management by each of the client's individual plants
lead to a fragmented carrier infrastructure. The establishment of true partnerships with carriers who understand the client's business was
consequently difficult to achieve.
Solution
Due to the transportation industry environment at the time
(upward pressure on freight prices due to a shrinking transportation capacity and increased fuel prices), it was
identified that a reduction in our client's freight expenditures would come about predominantly through changes in freight
flows.
- In order to optimize the client's freight flows, the following
steps were taken:
- the quality of the client's existing data was further scrutinized
and product detail added
- a freight management system which
tracks truck utilization and collects shipment data down to the
SKU level was implemented in order to build and maintain a detailed
archive of freight moves
- AMG's logistics professionals applied, and continue to apply,
their expertise and experience against the client's freight data to design a customized solution focused on immediate and long term freight cost
optimization
In conjunction with the freight management system described
above, a system of continuous measurement and reporting was implemented to allow AMG, on behalf of our client, to
continuously take advantage of new trends in freight flows and to monitor carrier performance.
Results
The above initiatives allowed AMG's client to save
approximately $200,000 in freight costs within the first year. In addition, cross-border consolidation on shipments from Canada
to the U.S. allowed for consolidated customs entries, reducing the client's customs brokerage expenses by 50%.
Since July of 1997, when AMG first began managing
transportation services for this client, we have grown from servicing 3 of the client's North American plants to 7 plants as
of April 1998.
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