3. Overview
● Transportation costs account for 30% of product costs
● BlueStar’s current bidding system has proved to be too costly
● Economies of scale lost due to the numerous carriers being used
● This system has led to unfavorable results in terms of customer service
● Key customers have begun to evaluate alternatives in the market
Total Annual Spending
$306,824,337
8. Top Five Destination States
8.2
7.5 7.3
6.9
6.6
0
1
2
3
4
5
6
7
8
9
OH IL IN GA NC
FreightPaid(inmillions)
States
9. Air Shipments
● Totals to $8,208,864 or 3% of annual transportation cost
● There were only 8 air shipments left after consolidation
● The average length of haul for an air shipment is 843
miles
● All air shipments that are under 1,000 miles for origin to
destination will be consolidated along side of TL and LTL
10. Truckload (TL)
●Accounts for $63,753,228 or 20% of annual
transportation cost
●Less than or equal to 45,000 and 3,200 cu.ft.
●Reduce the number of TL carriers
11. Less than Truckload (LTL)
● Accounts for $234,862,247 of 77% of annual spending
● This is the largest area for improvement
● Why would we consolidate:
● Better rates that lead to lower transportation cost
● Better relationships with carriers
● Fails to meet TL if the weight is below 10,000 and the volume is
below 1,000
12. Our Approach
● Top 20 OD Pairs
● 28% of freight paid
● 2 Day consolidation to keep customer service in mind
● We also offered improved rates
● Most prevalent rate (mode) and the average rate (mean)
13. Consolidation Preview
● Atlanta, GA to Cranbury, NJ
● Freight Paid before consolidation was
$2,751,080.18 and had 478 shipments
● After consolidation:
● Using the most prevalent rate saved $1,411,288.32 or
51%
● Using the average rate saved $1,314,264.81 or 48%
● Our number of shipments was reduced to 302
14. Improved Rate Preview
● OD Pair Atlanta, GA to Cranbury, NJ
● Freight Paid before the improved rate was applied was
$2,751,080,18 and had 478 shipments
● After consolidation:
● Using the most prevalent improved rate saved $329,342.04 or 12%
● Using the average improved rate saved $218,556.33 or 8%
● Our number of shipments was reduced to 302
15. Scenario #1 - Consolidation
Prevalent Rate
● Amount Spent Before
● $28,670,742
● Amount Spent After
● $15,803,549
● Savings of $12,867,192
Average Rate
● Amount Spent Before
● $28,670,742
● Amount Spent After
● $18,727,126
● Savings of $9,943,616
21. Carrier Analysis
● Carriers were rated using the Perfect Order Index (POI)
● POI was chosen as it is a commonly used industry measure
and its score is less forgiving
● This means if a carrier failed in one are completely they
would receive a 0 (zero) regardless of other scores
● Using the average of On Time Deliveries, Completed
Deliveries, Billing Accuracy, and Damage Free Deliveries
CROUSE CARTAGE
On Time 83%
Delivery Completed 82%
Damage Free 82%
Billed Accurately 85%
POI Score 47%
Score of 83% using average of all metrics
