Elemica – T&L sourcing

Optimization

Why Strategic T&L

sourcing

According to studies by Dickson (1966), Weber and Current (1993) and a more recent one by Sucky (2005)

Trend in T&L sourcing

• Tender complexity increases

– From local to regional tendering

– From service specific to

Network

• Increasing Supply chain

performance demands

– Transit time reliability

– Ability to absorb disruptions,

Alternative services and routings

Optimize your tendering

process

Speed up your decision process

• Develop awarding scenario’s

upfront and check after every

round where you are.

• Know your implementation cost

before you consider switching

suppliers.

• Reduce your workload during a

tender, focus only on those

area’s where you can gain.

Optimize your analyses

• Utilize your historical data to simulate the

cost of your future network with elements

such as:

– Weights/volumes.

– Peaks

– Routings

• Execute a sensitivity checks: currencies,

fuel, e.d.

Optimize the decision

• Find the best between • Current status and Cheapest pricing

• quality and timeliness

• Mitigate supplier risks to supply chain disruption

• Current and alternative performance (better or worse)

• Use the knowledge from your historical data.• disturbances, reliability

We have a great tool

Our tool helps you to support these decisions.

• It evaluate the effects of your awarding scenario’s

with a baseline: What if you would stick to our

incumbents.

• Scenario’s are based on various constrains.

– It quantifies the financial impact your objectives

or constrains have.

• For example: reduce the nr carriers by location to 1.

– You compare the difference and measure it

against the effects to your supply chain.

Scenario builder

An example

Small parcels

• Small parcels • Weight < 70 kg

• Dimensions:

Max hight = 60 cm

Max width = 60 cm

Max length = 120 cm

and 2* Hight + 2*width + length < 3 meter.

• Service • World wide pick-up or delivery

• Express delivery before 9, 12 or end of day

• Expedited service (consolidation and slower

transport means)

Market

• Main players are

– UPS

– DHL

– Fedex

– TNT

– GLS

Each of these players have own “strong area’s”

where they are able to offer “domestic” small

parcel services.

Rate structure

Zoning

Zoning

Focus changed

• Focus has changed from Zone, rate

calculation towards surcharges.

– Fuel can be 0% up to 20% of the cost

• Varies by carrier, Service and freight payer

– Customs clearance

– Special surcharges. Out of business regions etc

Decision making

• Scenario’s

24% saving 28% saving 30% saving

Scenario 1 Scenario 2 Scenario 3

one service provider for

the region

one service provider by

country

one service provider by

direction/country

229,636 266,717 285,949

Where do we go to:

• We look for Reliability and quality of your

service providers. The data collected in the

Operating network provides you insight to

current strength and weaknesses of your

partners.

• Model probabilities on:Carrier Transit times,

Seasonal effects

0

0.2

0.4

0.6

0.8

1

1.2

1 2 3 4 5 6

lane data distributionof carrier 1 on lane 6

gamma distribution(aplha=0.9, beta =2)