Getting creative with transportation: Cost cutting and service-level improvement

Transportation plays an important role in any product-centric company’s business, but it can also take a big chunk out of these organizations’ bottom lines.

In fact, aside from labor, it’s often the biggest cost of doing business for manufacturers, distributors, and retailers. Less-than-truckload (LTL) trucking can be a major expense, but it’s also a necessity in a business environment where smaller orders have to be delivered faster than ever.

Companies are turning to transportation providers and experts for help managing these complexities while also keeping accessorial, fuel, and other surcharges in check. For example, large national distributor Rexel is working with a long-time transportation partner to get its geographically-dispersed locations working from the same playbook when it comes to LTL and other transportation spend.

Rexel is also leveraging technology to gain better insights into that spend and has consolidated its LTL partner network down to a more manageable number. As a result, the moves are helping the company leverage its bargaining power when negotiating its transportation contracts.

All South Flooring is also getting creative with its transportation strategies by working with a carrier that drops an LTL container every day, waits for the flooring wholesaler to fill it up, and then comes back later in the day to pick it up and get orders delivered quickly.

The strategy is working very well for the wholesaler, which can now meet its customers’ demands for fast delivery based on later cut-off times.

Here’s how these two organizations are leveraging their strong partnerships and technology to save money, improve their logistics operations, and provide higher levels of service to their own customers.

All South Flooring’s fast delivery secret

When a customer calls All South Flooring to place an order for material, the wholesaler knows that any shipping delays may hold up the progress on an entire job.

That’s why the Charlotte, N.C.-based wholesale flooring distributor began using a unique less-than-truckload (LTL) approach roughly three years ago.

From its 29,000-square-foot warehouse and office in Charlotte, All South Flooring serves customers across most of the Southeastern U.S., where commercial flooring contractors, dealers, and retailers rely on the company for a broad range of flooring styles, designs, and options.

Greg Capell, VP of finance and operations, says that one of the company’s core go-to market strategies involves “making a splash” and grabbing market share based on service and delivery.

All South Flooring’s specific geographic footprint allows the company to get deliveries to its customers within a relatively short period of time—usually next day.

That timing extends to two days in certain parts of the wholesaler’s service area. “We modeled our business to be extremely customer service oriented, with quick turnaround of orders and fast delivery times,” says Capell.

To accommodate its growing customer base, All South Flooring sought out an experienced, reliable transportation provider to help it meet its fast delivery time commitments. It selected Averitt and then set up an innovative partnership with the logistics and
transportation provider.

Instead of booking LTL shipments using live loads and aligning last-minute cutoff times with Averitt’s pickup times, All South Flooring gets a daily (Monday through Friday) trailer drop, fills up the trailer, and Averitt sends a driver to pick up and replace the trailer, usually between 5 p.m. and 6 p.m.

“This gives us the flexibility to take next-day or two-day customer orders until the 11th hour,” says Capell. The wholesaler does use daily cutoff times, but if a customer calls at 3:30 p.m. on a Wednesday in urgent need of flooring to get a project finished, he’ll get that order on Thursday as long as All South Flooring has the products in stock.

“I can make a call to the warehouse and say: ‘Hey, this one’s hot. Go ahead and pull it and get it on the truck,’” Capell explains. “We’re not working up against a timeline and we can basically guarantee—assuming we have the inventory—next-day delivery to about 90% of our customers.”

All South Flooring also differentiates itself by not adding freight surcharges for standard shipping services, which means there are no surprises when its customers get their invoices. This applies to residential and retail orders, and it closely parallels the “Amazon mindset” that consumers have grown accustomed to when it comes to fast orders and shipping cost transparency.

“In this business, you can only control what you can control, and we don’t always know what the circumstances are when a customer calls at 4 p.m. to place a next-day order. All we can do is try to service them to the best of our ability” says Capell. “Our arrangement with Averitt takes the pressure off our internal operations and gives us the flexibility to respond very quickly and confidently in those situations.”

Having a trailer dropped and picked up daily also gives the wholesaler some breathing room when it comes to loading orders, packaging items like 8-foot-long moldings and performing quality control checks.

“Knowing that our backs aren’t up against the wall when it comes to timelines and getting orders dispatched has been a major benefit,” says Capell. “With Averitt as our partner, we’ve established a very scalable freight model that’s a win-win for ourselves and our entire customer base.”

Rexel: Reining in LTL costs & expanding freight visibility

As an electrical distributor with 27 distribution centers nationwide, Rexel USA serves areas that expand out as far as 100 miles from each of those facilities. Safe to say, the distributor has a lot of ground to cover every day—both in terms of overnight replenishment to each branch and last-mile delivery to its customers.

Rexel is also in the business of acquisitions, having acquired a number of other distributorships over the past 10 years. This created some fragmentation within the broader, parent company’s transportation network.

“As we assessed our transportation spend, it was evident that we needed to do a better job of leveraging partnerships with our LTL carriers,” says Julie Massey, VP of procurement, transportation, and logistics.

“Our transportation spend was spread across multiple different LTL partners,” says Massey, whose four-person team supports nine U.S. regions for the large distribution firm. Rexel has been working with AFS Services for about 20 years and turned to it for help streamlining its LTL component, gaining better visibility over it and driving some of the cost out of this critical aspect of its supply chain.

Massey says the distributor developed a request for proposal (RFP) focused on getting the very best LTL rates available for the high volume of product that the company moves on a daily basis.

The company uses AFS’ transportation management system (TMS) and relies on the transportation expert to help ensure that all DCs and large branches are choosing the optimal
carrier for all shipments.

Through this partnership, Rexel pared down the total number of carriers that it works with from 30 to only 12, including two national and 10 regional LTL carriers. By concentrating its shipment volume down to just a dozen providers, the national distributor was able to shave about $2.2 million from its annual transportation spend.

Rexel uses its TMS to ensure that those select carriers are indeed used for all shipments, effectively taking advantage of its contracted rates.

Rexel also renegotiated its small parcel shipments and recently signed a new contract that provides $1.5 million in annual savings on that freight option. The company is controlling shipping costs and getting consistent, reliable service from the 12 carriers that it works with.

These wins are all very important for a large distribution firm that services millions of customers from hundreds of branches and DCs around the country.

This year, Rexel is partnering with AFS to build out a “transportation scorecard” using the Microsoft Power BI interactive data visualization platform. “AFS’s analytics team is working with us to design that,” says Massey. “Once the scorecard is in place we’ll have in-depth visibility into our transportation spend.” For example, Rexel will have easy access to data like shipments by branch/location, transportation mode, and specific package details.

With this new transportation scorecard, all transportation expenses, accessorial charges, fuel surcharges, and other expenses that can drive up freight costs will be available on a user-friendly dashboard. Rexel can then use that data to improve its logistics and transportation decision-making.

“That will help us complete transportation reviews within each of our regions and drive accountability with them because at the end of the day, we want them to have the tools to be successful with transportation management,” says Massey, “and transportation hits their profit and loss [statements].”

Massey says the scorecard will be rolled out in November, and it will include Rexel’s spend across all modes, including LTL, small parcel, and ocean.

The company is also building in cost information on its own private fleet of delivery vehicles as well. “It will be a comprehensive scorecard from soup-
to-nuts on our transportation spend.”