Lower Freight Costs

Transportation is the most significant part of supply chain costs. Lower freight costs for customer shipments is the “holy grail” of consumer product and other supply chains. But there is a way that companies like Procter & Gamble (P&G) have proven. P&G reported in a conference that they had converted the unstructured, non-repeatable processes of picking and loading into a repeatable process. By doing this, P&G encouraged customers to order more products (i.e., a larger shipment size) to receive the “best price” on the product.

The repeatable process to lower freight costs

Creating a repeatable process is no slam dunk. However, such a process must be software-driven and sufficiently flexible to handle customer-specific requirements and many variables inside and outside the shipping facility.

Procter & Gamble chose AutoO2  to drive repeatable picking and loading. With this in place across its network, P&G was able to adjust the price book and allow its customers to determine how they want to order. As you may guess, customers responded by ordering more products – driving up shipment size and generating overall reduced supply-chain costs. And because freight is the most significant component of the total cost, the savings were enormous.

P&G has received other benefits

AutoO2 generates savings by:

• Increasing case pick productivity by 17.5%
• Cutting the learning curve for new staff from more than four weeks to well under a week.
• Savings can be up to $1,600 per new hire.

For example, pickers do not need to learn each product’s or family’s strength or stability; loaders can learn the different loading patterns based on order composition, state-specific-axle-weight restrictions, etc.

• Eliminated 75% of warehouse case damage
• Cut reloads 85%, saving more than $30/trailer in direct labor and much more by preventing disruptions.