A New Way Of Saving Freight Costs For Vendor Managed Shipments

IBM and Transportation | Warehouse Optimization have partnered to cut transportation costs for Unilever, P & G, Kraft, Nestle, ConAgra, Del Monte, Heinz and more than 20 others on shipments of Vendor Managed Inventory (VMI).

Vendor Managed Inventory (VMI) and Continuous Replenishment Programs (CRP) are value added services many large Consumer Product Goods Companies provide to their key trading partners. Historically, CRP and VMI consistently generate a broad range of benefits for both sides of the partnership, ranging from inventory reduction, increased service levels, better promotion planning and management, and improved partner communication. Now, there is an added freight savings on top of all of that.

Recently IBM announced in its Replenishment Conference that the Continuous Replenishment Service and Transportation | Warehouse Optimization have partnered to implement a sophisticated truck optimization feature called AutoVLB (Automatic Vehicle Load Building) for CRP/VMI generated orders. AutoVLB (also known as Super Truck) generates transportation cost savings while increasing trading-partner in-stock and maintaining inventory levels. The announcement, which included testimony from the pilot client, was well received by the 30+ CPG companies attending the annual event.

Freight costs are our biggest logistics cost element – and reducing them is a high priority, said a representative of the pilot client. Clients that leverage IBM’s Continuous Replenishment Service to ship full truckloads will have the option to use AutoVLB to fully optimize their shipments, producing loads that are completely full, which will lead to fewer trucks, and thereby reduce the average freight cost. Conventional wisdom suggests that when you start to create larger shipments, the inventory in the supply chain should increase. In practice however, this is not the case because AutoVLB more accurately chooses which items to put on the truck, resulting in improved fill rates while maintaining target turn metrics. This is reinforced through a nine month client pilot, where the turn rate has remained the same, or in some cases, even improved while the freight costs have declined by 4-8% depending on lane.

Order optimization with IBM’s Continuous Replenishment Service and AutoVLB, or Super Truck, has additional benefits that include reducing the number of trucks on the road, cutting carbon emissions, and generating real savings inside the warehouse. Clients who leverage IBM for CRP/VMI services will be able to leverage the integrated Super Truck capability to obtain these benefits, which help to make the CRP/VMI process an even more profitable part of supply-chain operations.

IBM’s Continuous Replenishment Service provides replenishment and VMI solutions to many of the world’s largest Consumer Products Goods Companies. Offered as a “Software as a Service” model, the solution technology and business processes are fully managed by IBM, helping clients focus on what is important to them – successful customer partnerships.

Transportation | Warehouse Optimization (T|WO) is a leading provider of logistics optimization systems for consumer products companies. Because T|WO has a long-established client base of well-run Fortune 50 companies, T|WO can rightly claim that it “helps the best companies get better”.

AutoVLB – Super Truck – More Product – Fewer Trucks

Contact: Tom Moore

Transportation | Warehouse Optimization

Ph (615) 791-8000

Email: Tom.Moore@TransportationOptimization.com <mailto:Tom.Moore@TransportationOptimization.com&gt;

www.transportationoptimization.com <mailto:info@TransportationOptimization.com&gt;