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Being more efficient in shipping translates to better optimization of the overall supply chain.Having the critical mass of collaborative food processors is the foundation of a success consolidation program; one that can offer scheduled national deliveries.Often OEMs need to buy a specific component from one supplier before they can specify the associated components and parts from another. A single part number for purchasing, manufacturing, and tracking simplifies the product qualification and manufacturing processes.Potential points of failure decrease when a tested and warranted subassembly eliminates much of the engineering to integrate components from various suppliers. The component supplier and OEM can collaborate across the design process as needed.Instead, their orders are paired with those of other manufacturers with similar LTL shipping needs (all have orders going to the same retail distribution center) to create TLs.According to many industry estimates, transportation costs can be reduced by up to one-third by moving from LTL to consolidated TL.From this, a company can negotiate longer terms, such as net-45 or net-60, or go for further price reductions on prompt payment initiatives and get a 1%-2% discount on net-10 payments.The purpose is to pool together a company's volumes in order to lower a company's total cost structure.
The key is collaborating through a successful consolidation program, such as the Hanson Logistics Velocities™ MVC.
Vendor consolidation savings go beyond just saving money on freight and prices.