Having total control of your logistics can literally save you millions!
Picture this scenario:
LG Electronics (LGE) imported in excess of 6000 containers per annum – this is effectively over 500 containers per month.
In effect, that is around 22 to 25 containers per day, meaning they needed to receive 3 containers every hour. If they took 2 hours to unpack a container and had 6 unloading bays, they would only be able to successfully unpack 18 per day.
It got tougher, as they were paying up to R200 000 on detention and demurrage per month – this excluded the truckers having to stand for hours and hours.
Containers were also not turned into the correct container depots, creating more detention charges – and these charges were in dollars, so the costs were running away.
This was among many other problems, but TSI CENTRAL STATION saw the challenge and the solutions.
The greatest challenge was showing LGE what having a single supplier managing their requirements could change. This was because of the high demand for the product, while taking a risk by using a 4PL could derail their market dominance. Worst of all it was right in the middle of their peak period (November). So, we offered to run it for free for a month – all they had to do was plan what they wanted and when they wanted it.
Our system was built to fix this kind of problem though so we captured all the instructions that were in play. We instructed all the transporters that we would be advising them on how and when they should deliver; each transporter received an SLA & KPI. If they failed to collect, they would pay, if they failed to deliver on time, they would receive a monetary penalty.
Our System is designed to advise what was coming (arriving at the port), what was cleared and available for collection, what had been collected and we went a step further as we tracked the trucks so we could have an exact ETA. In today’s terms this is called Artificial Intelligence (AI) using data to predict a future point in time.
We had a holding area off site to stage the containers, so we could ensure that we delivered the correct container on time. The hauler was able to turn around faster and collect the next container.
Daily reports of what was being delivered, what was going to be delivered were being provided and then we took it a step further as we captured the packing list, so we could identify a specific part in the container. This meant that whatever they were looking for could be found using the part number; we would then prioritise the container, keeping the sales & marketing teams happy and the clients happier.
The system created alerts of potential problems, allowing LGE to react to the problem before it became a major problem.
Planning was now done days in advance and that made the supply chain ordering cycle easier.
Paper work became easier as they now had everything in one place.
The outcome was quite significant. When LGE partnered with TSI, they saved in excess of R2 million rand in the first 10 months. Their sales had grown astronomically, with volumes up 25% – in the first six months. It is estimated that up to 95% of unplanned costs were eradicated or reduced.
They had a 98% on time planned delivery to their warehouse, zero detention and demurrage.
LGE had full control of their transport & logistics, and their cost did not increase as TSI’s pricing model is based on buying better and selling at no more than they were paying. Transporters also saved on standing time and became more efficient.