As logistics professionals, we are asked to support many functions within our company: Purchasing and Business Development among others.
For these 2 functions, we are often asked to provide freight cost studies, so that a total landed cost calculation can be made and the company can make the best decision given various scenarios.
The total landed cost is typically defined as the sum of the material piece price + transportation cost + insurance + import duties (for international shipments).
The Purchasing team may compare the total landed cost among various suppliers in order to determine the best sourcing decision. There are other factors that will go into this decision such as quality, ease of doing business, lead times, etc.
When my team provides these studies, I insist that we have a very good understanding of what these shipments look like based on the size, weight and shipment frequency: are we moving 3 pallets in a truck or 2 pallets over a full 40′ ocean container or is everything optimally packed into a 53′ trailer?
Knowing what these loads look like can make a big difference in the costs we quote to our internal teams.
Many companies have armies of resources and sophisticated software to quickly churn out these studies, but the vast majority of us do not have access to these great resources.
We need to bootstrap…that is, our management still wants the right answer, but we need to be more creative in providing it!
One tool that we use to visualize these prospective shipments is a container stuffing application found at SeaRates.
It is a rather simple, intuitive process…
a). you select whether you will be moving the product in an ocean container or a truck.
b). you enter the packaging details of each product. I chose a simple, single product shipment of light bulbs.
c). you go through a few more steps and the application provides a very professional visual of what your load looks like; in this case, it is packed within one 40-foot standard container.
Now, the great thing about graphics is that you can SEE that the load is not optimized. The application even tells you that you are utilizing only 50% of the container based on volume and 21% based on weight.
You can then go back and make some changes: perhaps ask for improved packaging to better utilize the space in a 40-foot container. And, if possible, load more pallets into one shipment in order to fully utilize the ocean container, which thereby reduces the freight cost per piece.
The point is that you are able to SEE and adjust. These studies are not about abstractions, but about moving “things” and you can make a better judgment call when you SEE what it is that you are shipping.
And, best of all…it’s FREE!
Click the following link for a PRINTER FRIENDLY VERSION of this article: LWL014 Tools of the Trade Visuals