Supply Chain Edge Helps a Textile Products Company Improve Transportation Costs During a Time of High-Cost Pressures from Carriers
A leading Textile Products Manufacturer sought help in mitigating the effect of current cost-increase pressures from their carrier base, while continuing to maintain their high level of service.
SCE analysis identified issues with inconsistencies in current carrier agreements, poor data, and difficulties created by their business policies.
SCE conducted a comprehensive strategic LTL RFP, which resulted in potential cost savings, instead of the increases they were anticipating.
Standard Textile, founded in 1940, is a vertically integrated company that designs, manufactures, and distributes decorative and workwear textiles for healthcare facilities, hospitality, and institutional use.
Sales and Marketing had set expectations with customers that any order received by 1:00 PM would ship same day, and all orders received after 1:00 PM would ship the following day. Around 70% of the shipped items were class 65, but the remaining 30% were class 250.
Current LTL carriers were using their own tariffs, although Standard Textile had issued their own Fuel Surcharge scale, which became effective when fuel exceeded $1.10 per mile. Even though there was carrier pricing for comparison in their business system, DC operators would select carriers based on their own criteria. Informal rules were used to decide between LTL and TL or LTL and small parcel, instead of using exact rate calculations.
These aforementioned issues were being exacerbated by the current state of the transportation industry, which included Electronic Logging Device (ELD) mandate, driver shortage, capacity shortage, and rate increase pressures.
SCE outlined the areas in which Standard Textile could make changes to transform themselves into a "Carrier of Choice", which would help the carriers justify keeping rates competitive while also avoiding detention charges, where were not uncommon.
Additional cost savings were demonstrated, including outsourcing of the freight audit and payment function, and treating the transportation operation as a profit center.
SCE selected a mix of LTL carriers to participate in a comprehensive RFP. These carriers comprised a selection of national and regional carriers that could service the DC's and the customer base effectively. Based on the results of the RFP, carriers were assigned lanes in the regions where they could best serve Standard Textile. SCE constructed a carrier routing guide to be used for optimum carrier selections.
The resulting mix of carriers and pricing structures presented Standard Textile with at least a 5% cost improvement in an industry environment in which prices were increasing by double digit percentages.