How can your organization improve logistics and drastically cut costs?
First, it’s necessary to look at the entire supply chain and focus on logistics and transportation as it affects all functions. The goal is to create a “world class” supply chain that would be sustainable over time. That means developing internal accountability, responsibility and organizational alignment. It also requires establishing a continuous improvement environment to maintain optimal performance.
A leading manufacturer moving high-volume commodities recently cut transportation costs by 25% over a single year by piloting a strategic approach within its supply chain. Historically, transportation costs made up more than 60% of this company’s total logistics spend. A significant portion of that money went towards leasing and maintaining rail equipment. Through better management of cycle times and maintenance processes, they were able to achieve a 30% reduction in dwell time, leading to a 25% savings in leasing and maintenance costs.
The organization also managed to avoid significant capital expenditures by better utilizing existing railcars, making it unnecessary to lease or purchase additional cars to keep up with demand.
More on cutting supply chain costs on IndustryWeek.
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