CSR@Green Supply Chain
Traditionally retailers have many a shipping sites from which they fulfill the retail stores or end customers. The shipping networks and the distribution points may seem to be a complex mesh to begin with. Upon careful analysis many a retailers have established that it is economical to fulfill their end customers by shipping via a consolidation distribution center. Principally, the savings from a consolidation distribution center comes from reduced transportation costs. Also in certain scenarios it also leads to reduced inventory from holding inventory in fewer locations.
What we are talking of here is that a Responsive supply chain is also a Responsible supply chain, it is more environmentally and socially responsible. And at the end of the day it is also more financially viable. These practices can lead to reductions in empty and circuitous miles, and also increased cubic capacity utilization. They can also lead to reduction in the number of vehicles required, reduction in net freight expenses and other operational efficiencies. The savings opportunity comes from switching expensive LTL freight out of the plant to full truckload to the distribution center.
The million dollar question is when is it more economical to ship direct to store and when is it more economical setting up a consolidation center. For the sake of comparison, if an organization is thinking about shipping a couple of cases via parcel from multiple sites Direct To Store is the way to go. If an organization is thinking about LTL shipments from multiple ship locations it starts to be more economical to look at a consolidation center. The other factor is the distance from the shipping site to the consolidation center. If by combining all the store direct orders you can ship a Full Truckload to the consolidations center and then combine that with the freight from multiple factories it reduces the inbound freight cost and the store delivery cost which would offset the cost of a consolidation center. Mathematics involved here is far complex as I have stated though.
Let us now look at the IT side of this initiative. ERP host systems can be modeled to align the distribution point network and the carrier routing maps to derive the most optimum carrier and service levels to be used for transportation. Although the warehouse can be provided with veto of optimize the carrier, nevertheless the prescribed shipment information can be sent down in the pick release instructions. There are many best of breed and ERP warehouse and transportation management systems available in the market that can help achieve these results. Rate Shopping modules are widely available in almost all packages like Manhattan (Rate Shopping), JDA Software Services (Pfastship), High Jump's Warehouse Advantage (K-Ship) and Oracle Shipping execution that can help achieve and benchmark these transportation strategies. Oracle Transportation Management is also a widely used product to achieve load consolidation.
There are many means but only one end. Green Supply Chains are the need of the hour and pulse of the industry. Green supply chains have yielded Green dividends, as many retailers have already realized.
