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June 8, 2023
Five ways shippers optimize their networks
Consumers have demanding expectations for rapid deliveries, stocked shelves, and competitive pricing, which creates a high hurdle for shippers. They have to ensure products arrive when expected while striving for the lowest total landed cost. That makes network optimization essential.

Streamlining operations, removing unnecessary miles, and strengthening relationships drive significant supply chain improvements. The trick is knowing where to start. Here are five ways today’s most advanced shippers boost their networks:

1. They think regional
The math is simple: Products get to where they're going faster when they have fewer miles to travel. Shippers are increasingly evaluating where their customers, suppliers, and distribution centers are located and identifying distinct regions. Regionalization saves time and money.

Amazon has optimized its network (the same network Amazon Freight leverages) and created eight regions designed to work self-sufficiently. Items commonly bought are placed throughout the country to be closer to customers. Since making the change, the distance items travel from fulfillment centers to customers has decreased.

This is a trend occurring elsewhere in the industry. For instance, Lowe’s has added cross dock terminals, bulk distribution centers, and e-commerce fulfillment centers and opened supply chain facilities in several regions. Dollar General has also announced plans to add distribution centers to create greater network efficiencies. It’s all in an effort to decrease the distance between pickups and deliveries.

2. They reduce touchpoints
Minimizing touchpoints in the supply chain cuts down on load handling which helps reduce costs and the risk of damage. To do this, some shippers, including Coca-Cola, are sourcing materials locally. Since COVID-19, more and more healthcare providers are embracing direct sourcing and working directly with manufacturers to obtain products and cut out intermediaries. It all results in less trucks, hands, and forklifts moving loads around.

Another strategy to reduce touchpoints is consolidating smaller shipments into larger ones. This can include moving to full-truckload shipments from less-than-truckload, so products don’t have to be unloaded and re-loaded onto a different trailer.

Then there is the ever-present goal of route optimization to limit unnecessary miles and touches. Last year, U.S. Foods launched the first phase of a delivery route optimization initiative that included identifying wasted miles and remapping routes to send customers to the most efficient distribution center by mileage and service.

3. They embrace technology
Technology is helping shippers streamline operations and get better visibility to more proactively address potential disruptions and forecast demand. Visibility is critical to decision-making and planning. GPS trackers in trailers ensure shippers know where products are at all times. Features such as electronic proof-of-delivery (POD) make handoffs between all stakeholders more controlled, faster, and easier.

In a 2022 executive survey by McKinsey, 43% of supply chain leaders said they planned to use artificial intelligence and machine learning for some planning activities. Another 17% said they planned to use AI and machine learning for most activities at some point. This type of tech can pull in company data from enterprise systems, point-of-sale systems, and store inventory levels to predict demand. Supply chain leaders are also using APIs and EDIs to streamline booking and make life easier for their employees who manage the day-to-day mechanics of shipping operations.

Some shippers are getting into even more advanced use of technology. Nike implemented distribution center robots to speed up order processing. The robots have helped the company triple its digital order capacity during peak seasons.

4. They emphasize communication
Improving communication within the supply chain can help shippers get a greater understanding of what is happening in their networks and foster stronger relationships with their supply chain partners.

Kraft Heinz has invested in a “supply chain control tower,” which is a centralized hub of communication for the company to oversee its complex operations. Such control towers make communications more efficient and clearer and provide real-time visibility and control over the end-to-end supply chain.

However, effective communication doesn't have to be high-tech. Regularly sharing information about demand forecasts, product specifications, and quality requirements with transportation partners enables all parties to be better prepared as demands and needs change. Consistent communication protocols get all parties aligned and improve coordination, especially during high-volume times.

5. They use data to make decisions
Data analytics provide valuable insights, and savvy shippers capture information through each step of the supply chain. Real-time tracking systems, such as GPS tracking or RFID, provide a steady pulse of data updates, which allow for prompt communication of delays, disruptions, or changes in delivery schedules.

Evaluating historical shipment data, customer demand patterns, and operational performance helps shippers better understand transportation trends. This analysis can identify opportunities to optimize transportation networks and anticipate customer demand. For example, the food and beverage company PepsiCo is using analytics and machine learning to predict out-of-stock items and alert retailers when the item is ready to be reordered.

Driving long-term success
As transportation and supply chain networks grow more complex, shippers must seek continual improvement to control costs while meeting customer expectations. While every shipper is different based on their industry and business model, every shipper can gain efficiencies by looking deeply at their networks and making improvements.

If you want to learn more about how Amazon Freight can help you optimize your network, contact our team.
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