Order-level Consolidation

Order-level consolidation is much more than less-than-truckload (LTL) consolidation.  LTL pooling makes the best of a bad situation (you will never truly optimize a truck by combining LTL orders).

ES3’s Consolidation program changes the model from fixing a problem to preventing a problem.  With ES3, consolidation starts with the retail buyer.  Buyers, for more than the dozen retailers in ES3’s Consolidation program, create truckload orders everyday across more than sixty participating manufacturers.  LTL orders are never created- fully optimized trucks are.

Retailers must place orders that are greater than 42,000 CAW (cube-adjusted weight).  Manufacturers are charged based on their share of product on the truck.  Transportation costs per case go down due to the optimization.  Retailers agree to a low fixed unloading fee and agree not to charge participating manufacturers any additional fees.

Manufacturers measure themselves in terms of service level to the retail DC (distribution center).  Retailers measure themselves on service level to the stores.  The difference between the manufacturer's 100% fill rate to the DC, and the retailer’s 94% fill rate to the store is the “truck not ordered”.  Based on the economics, retailers must order full truckloads to get the best pricing.  To achieve a full truckload, retailers have “planned out-of-stocks”.  In other words, they are out of stock on some items until they can build a full truckload order.  This results in out-of-stocks on the shelf, lost sales, and frustrated consumers.

Order-level consolidation changes this by allowing retailers to buy a layer of product at the same economics as a full truckload.  Service levels to the store go up by 4%.  The shelves are full.  Sales are up.  Consumers are happier.

With ES3, everyone wins.