Category Archives: Optimization
In today’s world of vendor selection for company Spend Analysis needs, the process “du jour” is to have the vendor conduct a free “Proof of Concept” (POC), Pilot, or classification test. Increasingly, this selection process is based on older standards for Spend data classification, and has become an incomplete test of a long term, successful Spend Analysis and larger “Spend Visibility solution” for your company’s Sourcing programs. Classifying data in some manner, which is an important step in ultimately finding … More
What’s a buying/leveraging group? A buying group is a collection of buyers that aggregate their demand into a single ‘account’ and negotiate with a commercial carrier/s for better prices and/or improved services and more importantly a “Known name” in the industry. The group of buyers should be organized around an industry sector or geographic region. How do buying/leveraging groups work? A group is usually formed when an individual or business decides use bulk buying tactics for transportation services. Once a … More
“America’s needs move by truck”…it is a true statement always has been and always will be. The transportation industry is faced with tremendous “issues” and “challenges” that are mounting up by the week. Fuel, capacity, equipment, insurance, regulations, contracts, unions, economy downturn, personnel, competition, technology etc. etc. are just to name a few issues that the industry is facing. When fuel reached $4.00 per gallon last summer of 2008 each increment of .05 increases put out approx. 1,000 pieces of … More
Many manufacturers are willing to work with suppliers and customers, and meet their logistical and distribution needs or requirements. After all, good practices increase efficiency and competitiveness, and save money. Furthermore, assisting customer and supplier needs usually means continued business. On the other hand, the different set of requirements from each major supplier or customer may prove unattractive or overwhelming to manufacturers. Some smaller even middle sized suppliers and customers may not be able to devote the necessary resources on … More
Inventory optimization and transportation share a common thread when balancing and justifying either enters the scene. No matter how the replenishment was decided, eventually what has been ordered needs to be moved from the suppliers to the manufacturer’s business unit location or drop shipped directly to the end-user. Many business units operate under “just in time” manufacturing guidelines and on-hand inventory is a major concern when justifying inventory cost vs. the actual transportation spend. So many business units have inventory … More
A large portion of companies operate in the blind when it comes to negotiating transportation/rule contracts because they leave the negotiating process in the hands of a Traffic Manager, Purchasing Agent or Cost Account who may have little or no understanding of the company’s goals beyond cost containment. Those companies that seek to elevate their Transportation Management Department by integrating it into a larger logistics-oriented or “leveraged buying group” strategy find that unless their transportation negotiators actually worked for an … More
Why are inbound shipments unique? It’s because companies don’t usually have the same kinds of controls over them as they do for their outbound shipments. In fact, many companies pay very little attention to this critical part of their business. When you leave shipping choices up to your vendors, you really have no control over the inflow of your goods and materials, which can lead to production delays, stock shortages, late deliveries, unhappy customers, and higher costs for your company. … More
How can an organization eliminate or reduce waste and increase speed in their supply chain? One answer is to replace warehouses and/or manufacturing locations with “cross-dock facilities” or “landing pads.” Tremendous pressure of global competition and just- in- time operations in the marketplace has spurred many manufacturers to adopt a lean production philosophy–and a lean supply chain that supports that philosophy. An important element in the identification and design of such supply chains is an effective line-haul- cross-docking-end user operation. … More
Industry week previously ran a good article by Chris Ferrell of Tompkins Associates on Best Practices in Freight Bidding that had a number of good suggesstions. The article offered up the following 12 best practices: Obtain commitment from executive management. This is always a good idea, no matter what project you are undertaking. Benchmark current freight costs. Also, separate out fuel surcharges from basic freight spend. This is critical. After all, how can you do better if you don’t even … More
Optimization can not only be used to reduce cost, but it can also be used to reduce risk. In this post I’m going to overview how you can effectively support seven common risk mitigation strategies in a proper strategic sourcing decision optimization solution (including the solution offered by Iasta, if you’re wondering). Capacity Assurance You can create exclusion constraints that restrict supply to suppliers with a minimum amount of capacity to insure that the suppliers can handle the award they … More
Tomkins Associates released some survey results from a recent study they did regarding supplier relationship management with Asia. With the promise of capitalizing on the low cost labor in Asian counties, businesses have been in an incredible rush to capture the economic benefits. However, companies that do not do their homework are often surprised to find that the business practices they are accustomed to in North America do not work as well in Asia. In the report, which was authored … More
It has been a very long time since I wrote a summary of what is going on, over on the ESF sister site – eSourcingWiki. Since many are now taking long weekends, or full holiday right now, today is a good time to bring attention to what exactly is going on over there. The wiki series are broken into 4 main categories: The Basics, The Technologies, The Methodologies, Global Sourcing Primers. Within each header category, there are numerous papers on … More
As proved time and time again, that’s what the majority of you – who still aren’t using optimization – are doing each and every time you execute an e-Sourcing project of even minimal complexity without using optimization. At reSource, Iasta provided five case studies of recent projects that it executed in conjunction with its clients that ranged in value from 2.8M to 110M. Savings on these projects ranged from 5.5% to 40%, and even the most complex project was completed … More
Well I couldn’t resist this…especially since I was once one of these buyers. What is more interesting for me is that having crossed over to the “other side”, the negotiating styles used by the supermarket buyers (Tesco’s etc) certainly sounded very familiar. When showing these tactics to Duncan Bullivant, the Chief executive of Henderson Risk Group, a seasoned hostage and kidnap negotiator, the article writes “even he was surprised”. Duncan then goes on to say ”not only do I recognise … More
Industry Week is on a roll as of late. In addition to their recent article on Best Practices in Freight Bidding, that Michael Lamoureux summarized in this post, they just published on article on 10 Strategies to Drive Down Your Transportation Spend that was rather good. In brief, the strategies were: Keep your network flexible to take advantage of cheaper and more economical freight lanes. Set budgets and measure spend against budget on a regular basis. Negotiate constraints for price, … More
