While at the University of Lausanne in 1896, the Italian economist Vilfredo Pareto first wrote about the 80/20 tendency in his first published paper, “Cours d’économie politique.” Fast track to the twentieth century when management consultant Joseph M. Juran turned Pareto’s observations into a rule which he called the Pareto Principle: “For many events, roughly 80% of the effects come from 20% of the causes.”
Now known as “the 80/20 rule,” this same principle can be used to analyze the supply chain and find supply chain solutions, with the central focus being the transportation of products to market. We learn from independent research that the average trailer shipment allows takes three days to move between facilities but is only on the road for eight hours. Put simply, the trailer is idling at a facility for 80% of the shipment time. Digital supply chain trends can help to turn this around.
Finding Supply Chain Solutions for the Most Common Causes of Idling
As companies tend to focus on the actual movement of goods, the time and money that it costs for trailers and drivers to be sitting by idling is often missed. Most of this idle time happens in their yard, with three scenarios being the most common:
Digital Supply Chain Trends for Greater Efficiency
To manage these scenarios, most companies use a combination of manual processes, spreadsheets, phone calls, and emails. However, effective management of gate, dock, assets, yard, shipments, and network operations can really only be achieved with the use of scalable, cloud-based supply chain solutions or yard management solutions (YMS) like those offered by PINC.
Here are four ways the digital yard helps companies save time, money, and effort:
1. Reel-In Intangible Supply Chain Expenses
At any given time, 5.5 million trailers in the United States make an average of 500 million moves a year. A trailer ships every three days and the average shipment distance is 200 miles at a cost of $400 per move, according to data from the U.S. Department of Transportation and the American Trucking Associations. By tracking trailers and inventory, companies are better able to calculate the time and money lost as trailers and drivers sit in yards and can then find better supply chain solutions.
2. Remove the “Hidden Costs” of Warehousing and Transportation
When shippers and consignees negotiate with carriers and compare the cost per mile between two locations, what is not taken into account is the cost of trailers and drivers standing idle in yards. Warehouse managers often want a number of empties available at any time “just in case,” but the cost of this excess is billed to those paying the transportation costs.
3. Shorten the Order Fulfillment Cycle
The objective of any business is to shorten the order fulfillment cycle. And to make this happen, yard management and supply chain solutions need to be optimized and advanced forecasts made available so that people can react to the market. When spoiled perishables and misplaced inventory are simply written off as lost product and insurance premiums increase, this drives up costs for everyone. Digital supply chain trends seek to prevent these losses and keep prices low.
4. Eliminate Slack at Different Touch Points
A cloud-based YMS produces real-time information in seconds that can be acted upon to eliminate slack time. For example, a DC can react to a late-arriving inbound shipment and immediately cross-dock it to a waiting trailer if it has this level of visibility. Or, if a shipper can shave dwell times here and there at facilities across a network it may ultimately shrink that order fulfillment cycle.
Get on the “Right Side” of the 80/20 Rule with PINC
Make better use of your supply chain assets with digital supply chain solutions from PINC. By utilizing our cloud-based YMS, you can access real-time information and automation tools. Our system can easily be integrated with your existing warehouse management system (WMS) or transportation management system (TMS) or both as required.
Contact PINC today to learn more!