Building Block #2: Transportation
Welcome back to our series where we’re covering the building blocks of supply chain to successfully grow your business. If you missed the first two articles, click here to catch up!How critical is transportation strategy to your success? To answer that, just remember the number 67 - as in 67% of total logistics spend will be transportation related costs.
That means you’re going to spend a bunch of money getting your product to your customer, so a lot is at stake when it comes to executing your transportation strategy correctly. Some might try to convince you that there is a cookie cutter approach to managing your transportation, but unfortunately, that’s bad advice. No two manufacturers are the same once you start accounting for manufacturing and customer locations, product specs, temperature requirements, etc. Your approach needs to be tailored to the unique needs of your company and will likely employ several different transportation modes. We’ll start with a basic explanation of some of the most common transportation modes that you may consider using:
Small parcel
Used for shipments that are typically 150 lbs or less and less than a full pallet. Commonly known small parcel carriers are UPS, FedEx, or USPS. Expedited options exist if product needs to be rushed for next day delivery.Less than truckload (LTL)
Used for shipments that are 1-6 pallets, and less than 12,000 lbs in gross weight. Your product will be pooled together with other freight the carrier is handling. It then works its way through the carrier's network until it is pooled for delivery to its final destination.Volume LTL / Partial Truckload
Used for shipments that are 7-20 pallets, and less than 25,000 lbs in gross weight. Volume LTL still runs through the LTL network, while partial TL is essentially splitting a truck with another manufacturer. Partial TL will have better transit times than volume LTL.Truckload (TL)
Used for 21+ pallets or more than 25,000 lbs. Your product will be the only product on the truck, and the carrier will pick up and proceed straight to the customer making it a much quicker option than LTL.There are additional modes of transportation that are even more specialized, however, it is likely that a majority of your freight will flow through a combination of these four methods. The key to success is selecting the right combination of the four for your business! Remember, 67% of your logistics cost is going to be tied up in transportation, so this is a critical decision to get right. Our team at YourLogistics is passionate about helping clients evaluate their business and selecting the most optimal modes based on service, capacity, and cost. For more information contact send us an email at hello@yourlogistics.us.Up next for Building Block #3, Customer Service! Don’t miss it, join our mailing list below:
