Bluestar office supply analysis
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Transcript of Bluestar office supply analysis
BLUESTAR OFFICE SUPPLY ANALYSIS
CASEY VEALLOGAN POILLUCCITRAVIS TRAINUM
MATTHEW GAYMASON HERNDON
NICK FRABOTTA
AGENDA● Overview● Our Approach● Consolidation● Rate Improvement● Carrier Analysis● Top Carriers● Review● Recommendation
Overview
● Transportation costs account for 30% of product costs● BlueStar’s current bidding system has proved to be too costly● Economies of scale lost due to the numerous carriers being used● This system has led to unfavorable results in terms of customer
service● Key customers have begun to evaluate alternatives in the market
Total Annual Spending$306,824,337
TOTAL ANNUAL SPENDING PER MODE
$234,862,
247
$8,208,86
4
$63,753,2
28
LTL
AIR
TL
AVERAGE SHIPMENT WEIGHT PER MODE
AIR LTL TL0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
9,514.5610,941.34
19,793.52
Carrier Type
Wei
ght (
in p
ound
s)
AVERAGE LENGTH OF HAUL
Air LTL TL0
100
200
300
400
500
600
700
800
900 843.59
468.05 457.99
Mile
s
Carrier Type
488
31,000
11,226
Shipments per Mode
AIR
LTL
TL
Top Five Destination States
OH IL IN GA NC0
1
2
3
4
5
6
7
8
9
8.27.5 7.3
6.9 6.6
States
Frei
ght P
aid
(in m
illio
ns)
Air Shipments
●Totals to $8,208,864 or 3% of annual transportation cost
●There were only 12 air shipments left after consolidation
●The average length of haul for an air shipment is 843 miles
●All air shipments that are under 1,000 miles for origin to destination will be consolidated along side of TL and LTL
Truckload (TL)
●Accounts for $63,753,228 or 20% of annual transportation cost
●Less than or equal to 45,000 lbs and 3,200 cu.ft.
●Reduce the number of TL carriers
Less than Truckload (LTL)
●Accounts for $234,862,247 of 77% of annual spending●This is the largest area for improvement●Why would we consolidate:
●Better rates that lead to lower transportation cost●Better relationships with carriers
●Fails to meet TL if the weight is below 10,000 and the volume is below 1,000
Our Approach
● Top 20 OD Pairs● 28% of freight paid
● 2 Day consolidation to keep customer service in mind● We also offered improved rates● Most prevalent rate (mode) and the average rate (mean)
Consolidation Preview
● Atlanta, GA to Cranbury, NJ
● Freight Paid before consolidation was $2,751,080.18 and had 478 shipments
● After consolidation:● Using the most prevalent rate saved
$1,411,288.32 or 51%● Using the average rate saved $1,314,264.81 or
48%● Our number of shipments was reduced to 302
Improved Rate Preview
● OD Pair Atlanta, GA to Cranbury, NJ
● Freight Paid before the improved rate was applied was $2,751,080,18 and had 478 shipments
● After applying Improved Rate:● Using the most prevalent improved rate saved $329,342.04
or 12%● Using the average improved rate saved $218,556.33 or 8%
Scenario #1 - Consolidation
Prevalent Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$15,803,549
● Savings of $12,867,192
Average Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$18,727,126
● Savings of $9,943,616
Scenario #1
Before After Savings$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$28.62
$15.80
$12.80
$18.72
$9.94
Prevalent AverageAxis Title
Dol
lars
(in
mill
ions
)
Scenario #2 – Improved Rate
Prevalent Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$24,083,909
● Savings of $4,586,832
Average Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$28,097,960
● Savings of $572,782
Scenario #2
Before After Savings$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$28.62
$24.08
$4.58
$28.09
$0.57
Prevalent Average
Dol
lars
(in
mill
ions
)
Scenario #3 – Integrated ApproachPrevalent Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$11,216,718
● Savings of $17,454,024
Average Rate● Amount Spent Before
●$28,670,742
● Amount Spent After●$18,154,344
● Savings of $10,516,398
Scenario #3
Before After Savings$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$28.62
$11.21
$17.45 $18.15
$10.51
Prevalent Average
Dol
lars
(in
mill
ions
)
Carrier Analysis
● Carriers were rated using the Perfect Order Index (POI)
● POI was chosen as it is a commonly used industry measure and its score is less forgiving
● This means if a carrier failed in one are completely they would receive a 0 (zero) regardless of other scores
● Using the average of On Time Deliveries, Completed Deliveries, Billing Accuracy, and Damage Free Deliveries
CROUSE CARTAGE
On Time 83%
Delivery Completed 82%
Damage Free 82%
Billed Accurately 85%POI Score 47%
Score of 83% using average of all metrics
Top CarriersOn-Time Delivery
CompleteDamage Free
Billed Accurately
Perfect Order Index
CROUSE CARTAGE 83% 82% 82% 85% 47%JB HUNT TRANSPORT INC 82% 83% 82% 84% 47%HOT SHOT EXPRESS INC 86% 82% 82% 82% 47%FRONTIER TRANSPORT CORP
86% 82% 81% 79% 45%SAIA MOTOR FREIGHT LINE INC
81% 78% 82% 83% 43%
Review● Overview● Our Approach● Consolidation● Rate Improvement● Carrier Analysis● Top Carriers● Recommendation
Recommendation-Scenario 3
Prevalent Rate●Total Spent Before
●$28,670,742
●Savings of 60.8%●$17,454,024
Average Rate●Total Spent Before
●$28,670,742
●Savings of 36.6%●$10,516,398