Boosting Collaborative Distribution – Say Goodbye to Redundancies

In order to eliminate unwanted, repetitious costs of logistics, numerous competitors have now united to work with each other.

A handful of shipping companies, which are experiencing a consistent rise in numbers, now look upon the process or the very framework that is needed to transport products from the manufacturing unit to the end user as an opportunity to work in tandem with each other rather than looking at it as a source for competition.

That advantage rests in slashing costs that are increasingly duplicative throughout all shipping companies and involve planning for transportation, warehousing and storage, exception management, fewer goods for shipment, untapped capacity, accessorials and other forms of supply chain expenses. Collaborative distribution has, for a long time, been an obvious concept that no one really considers—with hurdles largely related to embedded investments, hidden schedules and cultures. While the number of shippers adopting this methodology is relatively short, it is just a matter of time when the tide is completely turned in their favor.

Over the past decade, the interest shown in collaborative distribution has significantly spiked, but with that being said, the idea still consists of lengthy forecasting amongst retailers and manufacturers, or a handful of manufacturers who amalgamate their resources. Collaboration today has become avant-garde and has no resistance to counter.

Efficiency—And Super Efficiency

While collaborative distribution does significantly reduce the carbon footprint, which is a major benefit, for most shippers that are adopting this trend, the major drivers include customer satisfaction and big cost-cuts. Plus, collaborative distribution gives birth to increased levels of efficiency. According to the statistical analysis of the US Department of Transportation, around 15 to 25% of the entirety of the miles trucks travel in the US is completely empty. On top of that, 36% of trailers are underutilized miles that are empty.

Collaborative distribution enables companies to maximize their asset utilization, which is a big cost saver when you talk about transportation expenses, which, in turn, keeps customers happy. For example, a retailer may considerably benefit having tight deadlines met at the same time support smaller, more routine deliveries.

Matchmaking

There are other math makers than third-party logistics that identify opportunities of collaborative distribution for shippers. Even industrial organizations and multinational companies, as well as conferences, have taken an active part in matchmaking. The primary element is to posses the methods of sizing up supply chain networks and comparing them in order to discover synergies, which third-party logistics can essentially use as data from numerous shippers. You can think of third-party logistics as brokers for shipping companies rather than being directly involved.

The Future of Collaborative Distribution

Even before realizing the true potential of collaborative distribution in its current phase, there are companies which are increasingly looking ahead to how the next phase of the concept would look like. For example, experts from Virginia Tech’s CELD (Center for Excellence in Logistics and Distribution) are working on the concept that retailers and manufacturers can have the opportunity to take maximum advantage of an interconnected network for transporting products in the coming years.

This blog post was based off of an article from Inbound Logistics. View the original here.