US Manufacturer Achieves Significant Savings in North America-wide Logistics Event
Manufacturing
%
identified savings potential
time it took to run a national event (compared to 660 hours previously)
“There’s been lots of benefits here, in addition to just the cost savings, it’s really about helping our transportation planners become more efficient and also improving their capabilities. So now we’ve been able to lift that across the board.”
— SVP of Supply Chain at a US Manufacturer
The Challenge
Increasing efficiency without increasing headcount
Before Arkestro, it was estimated that bidding the transportation needs for the entire North American business would require an additional 8-10 people and take at least six months.
Exceeding the customer’s expectations of savings
At the completion of the second round of bidding in this two-round event, the identified savings opportunity far exceeded the customer’s expectations at 25.9% of historic spend.
Overview
An Arkestro Manufacturing customer, with a largely North American footprint, recently conducted a large event using the Arkestro PPO Platform for outbound transportation. A few focused events were executed as a test involving a few plants, and a handful of lanes and carriers. The test was successful in establishing a high level of supplier (carrier) participation, and identified savings of 5-15% during a period where this part of the North American logistics market was up broadly by 3%.
“We have 30 locations across the United States and we mainly sell through distribution to over 10,000 independent contractors who are certified to use our products. We move a lot of raw materials and a lot of finished products all over the country, by rail and truck, every single day.”
Approach
Working with the Arkestro team, the customer launched a national event in early March, covering all anticipated routes for over 20 plants. All carriers were invited to bid on any and all routes for which they provided coverage. 100% of the event was managed within Arkestro’s PPO platform, with a high level of automation.
“Tools are great, but if no one’s using them or they’re difficult to use, or no one’s helping with the change management and adoption, they might end up finding themselves on a shelf. Arkestro’s support [in implementing the platform] was the difference maker.”
Result
Amazingly, the customer received bids representing reduced rates in every lane! In addition, the team was able to bid all lanes (roughly 4,000) across 22 plants with no incremental resources, allowing them to execute the project in less than a month.
Of course, the North American logistics market is very dynamic, and realized savings will depend on final negotiation with carriers, capacity availability, and supply and demand dynamics throughout the year. The identified savings opportunity represents the upper bound, with realized savings being a percentage of this opportunity. Regardless, the overall project resulted in significant benefits through cost reduction, quickly locking in lower contracted rates despite the increase in the transportation markets, and in efficiency of execution of a national event.
“All lanes received lower bids than average historical price. Just think about that. That’s HUGE.”
Conclusion
The automation of supplier communications across the event was a significant efficiency gain, without which the customer would have been challenged to run a national event at this scale within a short time frame. The customer’s estimate of execution of a similar event without Arkestro was 660 hours. With Arkestro the process took 25 hours.
The customer estimates a future annual labor savings from a reduction in reliance on the spot market to be an additional 3,500 hours. Following the event, all updated rates (223K rates) were available for upload into the customer’s Transportation Management System for use by the Transportation Planning team.
“We asked our buying community to rate Arkestro against the platform we already had in place for some years. It was unanimous that Arkestro was preferred. And by the way, our incumbent is a widely known tool that many of you are probably using.”
FAQs
US Mfr Case Study
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What challenge did the US manufacturer face in their logistics operations?
The US manufacturer faced challenges in managing North America-wide logistics, including optimizing shipping routes, reducing costs, and ensuring timely deliveries across a vast geographic area.
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How did Arkestro help the US manufacturer overcome these logistics challenges?
Arkestro assisted the US manufacturer by using predictive models to streamline logistics operations. These models provided insights for optimizing shipping routes, reducing costs, and enhancing delivery efficiency.
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What are predictive models, and how do they improve logistics?
Predictive models analyze historical data, leveraging machine learning algorithms and statistical techniques to forecast future trends. In logistics, they help predict optimal shipping routes, cost-saving opportunities, and potential delivery delays.
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What specific savings did the US manufacturer achieve with Arkestro's predictive models?
The US manufacturer achieved significant savings through optimized shipping routes, reduced fuel consumption, and minimized delivery delays, leading to overall cost reductions in their logistics operations.
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Can Arkestro's predictive models be customized for different logistics needs?
Yes, Arkestro’s predictive models are highly customizable and can be tailored to meet the specific logistics needs of different industries and companies, ensuring maximum efficiency and cost savings.
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How does Arkestro ensure the accuracy of its predictive models in logistics?
Arkestro ensures the accuracy of its predictive models by continuously updating them with real-time data, refining machine learning algorithms, and validating predictions against actual outcomes.
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What kind of data does Arkestro's predictive model use for logistics optimization?
Arkestro’s predictive models use various data points, including historical shipping data, real-time traffic conditions, fuel prices, and delivery performance metrics to generate accurate logistics predictions.
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How quickly can a company see results after implementing Arkestro's predictive models for logistics?
Companies can start seeing measurable results within a few months of implementing Arkestro’s predictive models. The timeline can vary depending on the complexity of logistics operations and the volume of data.
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Is it difficult to integrate Arkestro's predictive models into existing logistics systems?
Integrating Arkestro’s predictive models into existing logistics systems is designed to be seamless. Arkestro provides support and guidance throughout the integration process to ensure smooth and efficient implementation.
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How does Arkestro's solution impact overall logistics efficiency?
Arkestro’s solution enhances overall logistics efficiency by providing accurate predictions for optimal shipping routes, reducing unnecessary costs, and improving delivery times, leading to a more streamlined logistics operation.
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What sets Arkestro's approach to logistics apart from traditional methods?
Arkestro’s approach to logistics is unique because it uses advanced predictive analytics and machine learning to proactively manage logistics activities. This is in contrast to traditional methods that often rely on reactive measures and manual processes.
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How can I learn more about Arkestro's predictive models and their application in logistics?
To learn more about Arkestro’s predictive models and how they can be applied to your logistics operations, visit Arkestro’s website or contact their sales team for a personalized consultation.