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With Retail Consolidation, Any Size Company Can Play in the Big Leagues

Retail Consolidation

As any retailer knows, it’s tricky to balance smaller inventories with the amount of product needed on store shelves to capture sales. But it’s just as tough for suppliers to figure out a way to send their products to retailers frequently without their transportation costs spiraling out of control. That’s why many suppliers are turning to specialty retail consolidators, who can coordinate their transportation to meet strict delivery appointments—even if their volumes are very small.

First, some background. A decade ago, suppliers commonly sent their products to retailers by the full truckload. Retailers stocked larger quantities of inventory so they would have product on hand for consumers to buy. But as the number of SKUs proliferated, inventory carrying costs ballooned.

So retail leaders determined how often each product was being purchased, developed forecasts, and ordered only the amount of product they would need on the shelf, to arrive just as consumers wanted to buy it (often referred to as just in time). By taking in smaller quantities of freight more frequently, they could significantly cut inventory carrying costs and still avoid lost sales.

That brings us to the present day. As other retailers, big-box pharmacies, and grocery distribution centers have adopted this idea, suppliers have been caught in a continuing quandary. They can’t ship by the full truckload—a generally lower-cost freight service with high on-time delivery percentages and infrequent claims. One option to deliver these smaller shipments is by direct store delivery. But another is to use less than truckload (LTL) to transport their smaller shipments. There are several problems with this approach:

  • LTL costs more than truckload, so it increases transportation costs for suppliers.
  • LTL tends to have lower on-time delivery percentages and higher claims than truckload, something that not all suppliers are equipped to deal with.
  • Because retailers’ inventories run so lean, they can’t accept delays in getting the product, or they must deal with stock-outs across the country. So they’ve instituted strict delivery appointments and fines for suppliers who don’t deliver on time.
  • Suppliers who repeatedly miss their delivery appointments lose the retailers’ business entirely.

And that’s where the Retail Consolidators come in. As an alternative to LTL for suppliers, the Retail Consolidators:

  • Combine multiple customers’ freight into full truckloads. That improves on-time performance, reduces damage, and lowers costs. Tests by one large retailer show that suppliers who use Retail Consolidators have a 37% better on-time performance.
  • Reduce lead times, as well as on-hand inventory, because they leverage truckload transit times.
  • Manage the appointment process. That ensures that loads arrive on time and are compliant with the retailers’ delivery requirements. So suppliers can focus on their core competencies and worry less about charge-backs and stock-outs of their products.
  • Help satisfy retailers, who have the product on hand, as well as fewer deliveries and an overall streamlined process.

And that’s how Retail Consolidators use critical mass to help shippers of all sizes meet the delivery requirements of large retailers, while keeping their transportation costs in check. Look into consolidation for your organization.