TLIP5008 Manage a Transport and Logistics Business Unit - Case Study 2

Case Study #2 : ABC Inbound Transportation Management

(Covering PCs 5.2, to 5.8)

Client:

A major contract packaging and manufacturing company operating within the fragrance and cosmetics industry.

Goals and Objectives:

To gain control over the inbound supply chain and thereby improve performance in terms of service and cost with the ultimate goal being improved outbound order fill rates and customer satisfaction levels.

Challenges:

Major challenges included:

• Inbound Dock Congestion
• Lack of vendor compliance
  • Early and late shipments
  • Misrouted freight
  • Incorrect freight terms
  • Overages and shortages
  • Lack of compliance in general

• Poor visibility relative to open purchase orders
• Inventory overages and shortages affecting inventory carrying costs and production scheduling
• Poor outbound order fill rates
• Lack of meaningful performance measurements
• Multiple points of contact (too many)related to the management of the inbound supply-chain
• Lack of communication among internal departments such as Purchasing, Transportation /   Receiving, Quality Control, and Accounts Payable / Accounting.

Inbound dock congestion:

It was typical for the client to receive multiple inbound LTL shipments per day from various carriers. Many of these shipments would consist of relatively small quantities of pallets, 1 to 3. Because of lack of dockage, receiving area, the inability to effectively process multiple inbound orders, and lack of pre-scheduling chaos ensued which created a ripple effect throughout the entire organization. In order to provide immediate relief, Land-Link established an off-site cross dock operation where multiple shipments were consolidated into fewer truckload quantities for final delivery. While this solution was meant to be temporary in nature, pending rollout of the final inbound freight management process, it provided the immediate relief that was needed.

Lack of vendor compliance:

A general lack of vendor compliance and control was at the core of the difficulties being experienced by the client. Although some of the client’s expectations were, in fact, included in the original terms of sale with each supplier, not all were, and where included, typically the “rules” were not being followed and compliance was rarely enforced. It was common for suppliers to ship product early and late with both product shortages and overages common in occurrence.

In addition, suppliers maintained the responsibility for carrier selection and the routing of inbound shipments which resulted in excessive freight costs, inferior transportation service levels and scheduling implications. Finally, poor shipment preparation and shipping document inaccuracies negatively impacted the client’s organization in terms of quality control and financial settlement.

 Major components of the solution:

Vendor routing guide:

Land-Link Traffic Systems Inc. authored, with the client’s assistance, a formal inbound routing guide, approved by the client and subsequently distributed to all participating suppliers. The routing guide was considered to be the formal document containing and describing all of the client’s expectations relative to supplier performance in terms of product readiness, scheduling, routing, product quality, documentation, financial settlement, etc. Once distributed to and acknowledged by all of the suppliers, formal communication of expectations and terms of engagement was considered complete. The formal routing guide was referenced and included as an addendum to all subsequently issued sales agreements. Finally, portions of the routing guide served to further support a Quality Control checklist that was used by the client’s receiving department for the purposes of recording various infractions on behalf of the vendors related to product condition, pallet quality, packaging, shipping documentation, labeling, bar-coding, etc. The completed Quality Control checklists were used a supporting documentation for the levying of charge-backs by the client and against the supplier due to non-compliance. It should be noted that a schedule of charge-backs was also included in the routing guide itself.

Purchase Order Download:

In order to gain visibility and control over open purchase orders, Land-Link established an automated download of the client’s open purchase order file. Domestic, international, standard, and blanket purchase orders were included in the daily file. In addition, purchase orders issued by the client’s customers were also captured. The orders downloaded on a daily basis into the Land-Link TMS system. It should be noted that, in this case and because the client desired to outsource the daily freight management function to Land-Link, the TMS was used by the outsourced operations department in order to execute and properly manage inbound shipments on behalf of the client on a daily basis. Partial releases against blanket purchase orders and “HOT” shipments were supported as well. Through enhanced visibility to open purchase orders and the support provided by Land-Link operations, greater control over the inbound supply chain began to emerge.

Scheduling and Routing:

With the download of open purchase orders in place, Land-Link was now in a position to provide the client with improved scheduling and routing of inbound shipments. The temporary off-site consolidation process was terminated and was replaced with structured and standardized one hour delivery slots based upon the number of doors available to accept inbound orders and the number of carriers used to support the logistics process, typically three core carriers at any point in time. Imports were also managed as part of the process in order to provide the client with a single source solution.

Daily Scheduling and Planning:

By utilizing the requested delivery dates assigned to each purchase order less applicable transit time, Land-Link was now able to proactively make contact and communicate with each supplier on a per order, per shipment basis in order to ensure timely delivery of product to the client.

In addition, the client, through Land-Link, was now fully in charge of all routing and carrier assignments on a per shipment basis thereby eliminating excessive freight costs, late and early deliveries, overages and shortages as well as dock congestion. Daily planning and operational control was further facilitated through the use of ASNs, ACNs, EDI transmissions, and the Land-Link Control Sheet and Pre-Load Report.

Service Level Maintenance and Sustainability:

Land-Link ensured that necessary service levels were sustained at all times on a per shipment basis through effective communications with the client, supplier, and asset-based carrier. In addition, Land-Link’s commitment to tracing all shipments (100%) from pickup to final delivery and support of service and cost performance reporting allowed for the sustained benefits of the program.

Performance measurements:

Various performance measurements and Key Performance Indicators were deployed and continue to be relied upon to measure cost and service performance as well as to identify additional areas of concern where improvement is needed.

Evolution:

Over the course of time, as expected, the solution deployed and the methodologies used buy Land-Link to effectively support the client’s inbound supply-chain has changed many times as the client’s organization and business environment, in general have changed and evolved. It is anticipated that additional changes, into the future, will continue to be part of the strategy.

Results:

All client objectives related to the execution of their inbound supply chain have been met, and the client continues to be the recipient of the benefits associated with the solution. 

Activity 5.2       What are the goals and objectives of ABC Inbound Transportation Management?

Activity 5.3       What are the challenges for this company?

Activity 5.4       Why there was inbound dock congestion? Explain.

Activity 5.5       Explain the lack of vendor compliance and what problem the business may face due to it.

Activity 5.6       What remedial steps the company undertook to overcome the challenges.

Activity 5.7       What were the end results?

Activity 5.8       Student need to prepare a report on the findings through the case analysis. Report should be brief between 400-500 words.