Time is Money Profiting from Reduced Cycle Time

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1 Time is Mney Prfiting frm Reduced Cycle Time

2 Yur retail custmers are demanding smaller, mre frequent shipments, which increases yur cst-t-serve them. While this makes their inventry mre predictable and minimizes bth their carrying csts and ut-f-stcks, it csts yu mney thrugh increased fulfillment csts and nt shipping in ecnmic quantities. What if yu culd meet yur custmers demands fr perfect rders, increase sales and service levels, and reduce yur cst-t-serve yur custmers? What if yu culd accelerate the flw f smaller shipments t yur custmers distributin centers, reduce cycle time, and imprve n-hand cnsistency? Natinal Cnslidatin Services (NCS) PRIORITY ONE SERVICE was created specifically t prvide cnsistent delivery f yur LTL shipments thrugh a netwrk f cnslidatin centers directly int yur custmers distributin netwrks. PRIORITY ONE SERVICE dramatically reduces cycle time versus direct LTL and eliminates the uncntrlled variability f individual deliveries. NCS prvides reliability which reduces cstly inventry at the DC level. The result fr yu and yur retail partners is a speed-t-market prcess that reduces stck-uts thrugh timely delivery f yur prduct. The simple result is a lift in yur ver-all sales. Plus all this is accmplished withut changing yur fulfillment culture r ways-f-wrking! THE ISSUES WITH SMALL SHIPMENTS Retailers dn t want t wn cstly inventry. They prefer t sell inventry befre they pay fr it. They want t lwer DC inventry by increasing inventry turns while imprving the in-stck cnditin at their stres. This missin nw extends t smaller and less expensive items. All parties benefit frm just-in-time shipments that accelerate the flw f merchandise frm a supplier, thrugh a distributin netwrk, and int a stre. Fr a retailer, lwering DC inventry requires rdering the right amunt, at the right time, and at the right price. This translates t eliminating minimum purchase quantities, then the rdering and shipping f smaller quantities mre frequently. But smaller, mre frequent rders and shipments (LTL) increase cycle time. They cst mre t ship and take lnger t fill and deliver than full trucklad. When yu send an LTL shipment, yu are drpping yur shipment int a netwrk that has multiple handlings and adds transit time t the rder cycle (and increases the risk f bth damage and lss). As transit dependability suffers, yu lse the ability t accurately plan arrival time at the retailer s DC. NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 1

3 A cmmn carrier s LTL netwrk is fragile because it is predicated n mving fully-laded trailers between break-bulk pints. Yur shipments are dependent n break-bulk thrughput t mve t the carrier s next terminal handling pint. The last mile is then subjected t trapping at destinatin terminal. The LTL carrier hlds yur shipment until there is enugh freight t make an ecnmical delivery t the retailer. Yur shipment may sit n the dck just miles frm yur custmer and nt get delivered by the buyer s ship-t-arrive date. In additin, since transit time with LTL is nt guaranteed and arrival time uncertain, appintments cannt be pre-scheduled. Scheduling the delivery appintment must wait until the shipment arrives at the destinatin terminal f the LTL carrier. If yur custmer s distributin center is busy and cnsumed with pre-scheduled appintments, yur shipment can be delayed additinal days. Dependability is THE critical success factr t making a just-in-time strategy wrk. If delivery is uncertain, inventry accumulates t prtect against ut-f-stcks in the stres. Althugh emergency rdering and expedited shipping is anther remedy, it cmes at an extremely high cst. The buyer must be able t depend n rders/shipments arriving in time t fulfill stre demand -- transit must be dependable and arrival at the DC predictable. When yu hire a carrier t mve a full trucklad, yu are, in essence, chartering a vehicle. Yu have exclusive use f that vehicle fr the transit and cntrl the ruting and the schedule, within the parameters f the law. When shipping a trucklad, transit time is knwn and arrival time can be easily planned. With LTL, yu cntrl neither the ruting nr the schedule (unless yu pay extra fr time-specific service). HOW IT WORKS NCS PRIORITY ONE SERVICE takes the variability ut f the supply chain. NCS cnslidates smaller shipments frm multiple suppliers int trucklads at a single cnslidatin pint and mves them n pre-appinted schedules direct t the retailer DCs. NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 2

4 Althugh there are many ptins fr submissin, fundamentally an rder fr pick-up is initiated with NCS. NCS crdinates pick-up f yur shipments, mving them t the nearest NCS facility, where they are crss-dcked and laded int utbund trailers. NCS delivers t yur custmers, where standing appintments at destinatin DCs expedite prduct receipt. Althugh this prcess appears straightfrward, its success is due t three factrs: Transit and Scheduling is tightly-cntrlled, significantly reducing the time t deliver versus the traditinal LTL schedules Accunting at each stage is precise -- case and/r pallet cunt is verified, and precise shipping dcumentatin is cmmunicated t all stakehlders Standard and stringent prcess executin prvides abslutely cnsistent results The ver-all impact t yur supply chain is a speed t market and handling that is characteristic f an exclusive-use service, but at traditinal LTL cst. Quality is evident by cnsistent damage-free, n-time, and intact deliveries. WHY IT WORKS There are significant cmplexities in executing a cnslidated delivery slutin withut cllabratin. Few cmpanies -- retailer r supplier -- have sufficient vlume, r the strategic desire, t cnstruct a crss-dck netwrk exclusively fr themselves. If they did, it wuld be unidirectinal, lacking the lane density and frequency t justify the expense. There are three critical success factrs that enable NCS t succeed in prviding an efficient and cst-effective LTL shipment alternative. 1. The Crss-Dck facility must be in a Strategic Lcatin NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 3

5 A. T assemble inbund shipments frm suppliers dispersed natinwide, the cnslidatin pint(s) must be centrally-lcated. B. The service center must be able t receive, crss-dck, and ship within 24 hurs. C. They shuld be clse t supplier s facilities, but must be n further than 2 days transit away. D. They shuld be clse t receiving DCs, but must be n further than 3 days transit away. 2. The Netwrk must be perated by a Managing Partner A. NCS manages/perates the netwrk and prtects the interests f all trading partners. B. Intercnnected and dependent prcesses and timing are centrally managed by NCS. The gal f NCS is t nt change the retailer s r the supplier s daily business prcesses. T send an rder t NCS, yu simply tender a pick-up request. Yur standard perating prcedures remain the same. C. The retailer receives mre JIT shipments in mixed-supplier full trucklad quantities, with better dcumentatin and mre advanced ntice f expected prduct. D. T supprt prmtinal and display rder spikes cnsisting f multiple trucklads, NCS can arrange pulse deliveries -- spreading multiple deliveries acrss multiple days-f-the-week -- t help balance the receiving DC s wrklad and efficiently facilitate timely stre delivery. 3. The Netwrk must deliver a value impact t bth the supplier and the retailer. NCS ptimized supply chain structure minimizes peratinal csts, streamlines prcesses, and significantly increases service levels. Yur custmer service level increases and yur risk decreases with n ut-f-pcket csts t yu. BENEFITS PRIORITY ONE SERVICE delivers Velcity, Dependability, and Visibility. The result is dramatically reduced cycle time versus shipping direct LTL -- and with much better quality. Many f ur custmers have experienced cycle time reductins f nearly tw weeks -- frm 22 days dwn t 9 days (r less)! This cycle time reductin cascades int a multitude f ther benefits fr yu and fr yur retail custmer. Velcity - Uncntrlled variability exists in an LTL netwrk -- transit time and lcal delivery time vary with netwrk vlume, and delays will likely ccur. NCS mves shipments n a specific schedule; they arrive at the NCS service center directly and quickly. NCS has daily pre-scheduled appintments fr all DC lanes. NCS is pen-t-receive 24/7 fr all inbund freight. Carriers are nt delayed waiting t get int an NCS service center. NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 4

6 Any prduct that cmes int any NCS service center tday, mves ut tday! Deliveries direct t Retailer DCs are made in cnslidated multi-supplier trucklad shipments with pre-scheduled and pre-advised appintments at the receiving lcatins. This precise scheduling and cmmunicatin cmpresses days ut f the nrmal LTL transit time, giving yu faster and mre cnsistent dr-t-dr transit times. Faster and mre cnsistent perfrmance reduces safety-stck inventry while increasing inventry turns. Faster cycle-time cmbined with increased shipping cnsistency (and reduced lead time variability) results in significantly-imprved in-stck psitins. Predictability in the demand cycle facilitates better frecasting fr prmtins and ther vlume spikes. The result fr yu and yur retail partners is that yur prduct is n-theshelf and n-time, which imprves in-stre sales, and therefre increases yur sales. Yur prf is reflected in yur shared Key Perfrmance Indicatrs and Screcards. Dependability - The mre freight is handled, the mre susceptible it is t lss and damage. PRIORITY ONE SERVICE reduces handling by ruting gds thrugh just ne crss-dck facility. NCS standards and precise accunting fr inventry in transit minimizes the risk f service failures, lss, and damages. Visibility - With NCS, all stakehlders have cmplete visibility t shipments in transit. NCS inputs Purchase Order detail int the DC receiving mdule which is immediately available t the respective buyer and specific suppliers fr every pre-scheduled lad. An arriving lad is sequenced fr the receiving assciate in the rder it is expected t be unladed. NCS maintains a cmplete recrd f every shipment with references t the PO numbers it cntains, the assigned carrier, and delivering trailer number. Yu can service yur custmers requests fr mre frequent, smaller rders, plus ensure they are n time and accurate. Sales are ptentially increased due t imprved in-stck psitins in yur custmers stres. PRIORITY ONE SERVICE benefits yur custmers by delivering t standards which free capital dllars thrugh reduced inventry safety-stck levels and increased inventry turns. Mst imprtant, yu can lwer yur cst-t-serve yur custmers and accelerate yur rder-t-cash cycle time! ABOUT US Natinal Cnslidatin Services was funded in 1998 with the initial charter f reducing cycle time and inventry within Walgreens. Since apprximately 95% f replenishment shipments Walgreens received were cnsidered LTL, the PRIORITY ONE SERVICE was created t deliver LTL shipments cnsistently frm many suppliers shipping lcatins, thrugh a cnslidatin center and int the Walgreens distributin netwrk. T date, ver 1350 suppliers have utilized the PRIORITY ONE SERVICE prgram. They ship frm ver 1750 lcatins t 19+ Walgreens DCs. Eight hundred fifty are regular suppliers (53.3% f the ttal). NCS is named as a primary carrier n Walgreens ruting NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 5

7 guide n 72% f the service lanes in the dmestic U.S. and is the largest single service prvider fr LTL replenishment purchases fr Walgreens. The PRIORITY ONE SERVICE netwrk includes Blingbrk, IL, Eastn, PA, Atlanta, GA, and Santa Fe Springs, CA. The netwrk is scalable t service ther retailers natinwide. T appreciate the magnitude f the savings pssible by emplying the PRIORITY ONE SERVICE, ne simply needs t examine the results Walgreens has realized in its partnership with NCS: Ttal safety stck was reduced frm 23 t ~10 days Cycle time t Walgreens was 22 days prir t NCS; it is currently under 9 days and NCS ttal cycle time is less than 7 days Walgreens has stated, N ne gets prduct int ur DCs FASTER than NCS. CONTACT US Fr mre infrmatin, please call: Jhn Macarl (877) x8020 Natinal Cnslidatin Services 465 West Crssrads Parkway Blingbrk IL Or click n this link fr us t call yu: CONTACT ME NCS APRIL 2013: PROFITING FROM REDUCED CYCLE TIME 6

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