Reducing Supply Chain Costs
"The person who gets the farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore."
--Dale Carnegie
The removal of a distribution center and leg of transportation reduces the supply chain cost of getting product from the manufacturer to the store by 30% for both manufacturers and retailers. This translates into about $0.54 to $0.78 per case based on research done by AT Kearney. These savings are dramatic in an industry where money is made in pennies on a case.
Manufacturers are guaranteed savings through reductions in case pick and transportation costs. Also, due to the accuracy inherent in ES3’s systems and automation, ES3 assumes all responsibility for shipping errors (overs, shorts, and damages or OS&D). These are the contractual savings. Other savings that accrue to the manufacturer include:
- Reduction in customer service costs: The manufacturer no longer needs a service team to support order changes, order expediting and tracking, vendor-managed inventory (VMI), OS&D, etc.
- Streamlining of plant operations: Product is shipped to ES3 based on optimizing manufacturer flow, not waiting for the retail order. This allows the manufacturer to reduce product handling at plant locations and to ship via the most efficient mode of transportation, such as rail.
- Improved product traceability: The manufacturer usually loses visibility of product movement once it arrives at the retail distribution center. In the D2SSM model, the manufacturer sees when the product moves to the store.