7 Questions: Is a Retail Consolidation Program Right for Your Business? | Transportfolio
Shippers with less than truckload (LTL), partial, or underutilized truckload often benefit by employing a retail consolidation program. If you can answer yes to one or more of these questions, a retail consolidation opportunity may be right for your business.
1. Have your transportation costs to serve retailers been increasing?
Have your transportation costs to serve retailers been increasing? | Transportfolio
Retailers use compliance programs to improve efficiency and lower inventories, among other goals. But lower inventories often translate to smaller shipments for their suppliers. And smaller shipments—whether they are LTL, partial load, or underutilized truckload—cost more for you to ship. The resulting expansion shows in the transportation budget.
2. Is your bottom line affected by chargebacks?
Is your bottom line affected by chargebacks? | Transportfolio
Retailers are quite specific about service expectations, from requested arrival dates to missed appointments. Penalties for noncompliance can range from $150 per occurrence to 3% to 9% of the cost of goods.
3. Do you regularly schedule retail deliveries to multiple distribution centers (DCs)?
Do you regularly schedule retail deliveries to multiple distribution centers (DCs)? | Transportfolio
Shipping LTL or partial loads from several vendors to multiple retailer DCs adds complexity and confusion, especially when multiple carriers are used and transit times vary.
4. Is a lack of expertise, technology, or visibility negatively impacting communications with retailers?
Is a lack of expertise, technology, or visibility negatively impacting communications with retailers? | Transportfolio
Technology enables the kind of proactive communications that retailers require before they select a vendor as a supplier of choice. In addition, technology gives shippers visibility to and reporting on all shipments. That way, they can see where chargebacks frequently occur to correct problems.
5. Do your shipment sizes and purchase orders (POs) vary?
Do your shipment sizes and purchase orders (POs) vary? | Transportfolio
Retailers may order a variety of shipment sizes. Potentially, that means more LTL or partial shipments, plus linear foot charges and cubic capacity rules that can add to process requirements and costs.
6. Would preferential appointment status help speed up your deliveries?
Would preferential appointment status help speed up your deliveries? | Transportfolio
Some suppliers receive preset appointment status with retailers for faster, easier deliveries. This option is usually only available for shippers with high volumes.
7. Are you inconsistent in meeting tight delivery windows?
Are you inconsistent in meeting tight delivery windows? | Transportfolio
A supplier strategy that includes LTL can be successful if the supplier controls all their cross-functional variables to provide adequate lead time. If the supplier can’t control these variables and attempts to use LTL strategy without sufficient lead time, noncompliance can result. LTL carriers typically perform to their quoted transit times, but those transit times may not meet the retailer’s compliance requirements.
How to Move Forward with a Retail Consolidation Program
How to Move Forward with a Retail Consolidation Program | Transportfolio
An experienced consolidator who already works with many retailers can help suppliers begin a retail consolidation program. These consolidators know the compliance requirements; some pre-schedule regular appointments with the retailers, either because they are a core carrier for the retailer or have large freight volumes. Some also provide technology to help the supplier simplify transportation, reduce dock congestion, and increase visibility into their products in transit.
Beyond the cost savings they realize, many suppliers have also achieve reduction in total lead time, which reduces inventory carrying costs. Finally, as products move more quickly off the books on a prepaid basis, the supplier can improve their cash conversion cycle and become more profitable. These benefits add to the supplier’s ability to precisely address metrics that retailers use to gauge performance, which results in fewer missed delivery appointments and out of stocks that cause chargebacks.
You can learn more by reading the white paper, How Retail Consolidation Can Increase Compliance and Savings.
Editor’s note: This post originally ran in March 2016. Since it remains a relevant topic, we wanted to share it with you again.