People Innovation Excellence

Trucking on Down to Savings

roads_and_loadsPicture Source: www.firsttruck.ca

BY HOMERO H. CONTRERAS

Industrial Engineer – Volume 43 Number 6

The trucking-source project had the following goals: to reduce transportation expenses; to normalize the costs per destination; and to consolidate a trucking-suppliers database to achieve a better administration and evaluation of the company’s supply chain partners. In 2005, authors Helen Clegg and Susan Montgomery proposed a sourcing methodology in their article, “7 Steps for Sourcing Information Products.” Their procedure starts with profiling the category and continues with selecting the sourcing strategy, generating the supplier portofolio, selecting the implementation path, negotiating with and selecting suppliers, and integrating suppliers before concluding with the seventh step, benchmarking the supply market and evaluating suppliers.

Profiling the category included a detailed analysis of trucking expenses and requirements of the company. At the same time, a software tool was designed by working with the information technology department. This tool supported trucking control and served as a reference during sourcing negotiations.

The project used the diamond of sourcing strategies to select its sourcing strategy. Generating the supplier portofolio required collaborating with the shipping department to define supplier requirements, which were different for manufacturing plants and distribution centers. Selecting the implementation path meant making decisions about negotiating strategy. The objective not only is to reduce the number of supplier to achieve a better control of shipping operations, but also to guarantee suppliers a considerable consolidated freight and number of deliveries.

An executive in charge of negotiations was assigned to each cluster. Each cluster negotiated for a cluster, not for a specific plant or distribution center, which helped avoid the previous results that yielded different rates on similar routes to similar plants or distribution centers that even included different rates for the same supplier. Each executive was trained in a negotiation methodology, including among other subjects, the following: preparation for the quotation process, calculation of breakevent points, selection of suppliers, defining due dates for quotations, reception and evaluation of proposals, rates negotiation, process of agreement and contract.

The project included a pilot in the most important cluster of the company. Pilot pick a supplier that have the continous evaluation of suppliers performance to get more benefits. It could reduce the cost, because the negaitve effect of different rates for similar routes and/or facilities wsa eliminated. Defining route packages also offered a qualitative improvement. The development of the catalog of suppliers also offered a broad knowledge of their characteristics and capabilities. Finally both the economic benefit and the qualitative improvement in the relationship with suppliers have led to a better performance in the process of shipping and sourcing trucking suppliers.

BY:

Aditya Hartaji (1501188864)

Asyifa Febrinasari (1501203890)

Dwi Satya (1501167582)

Micksen Tanicky (1501155600)

Nitha Amelia (1401096004)


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