L

D

S

SAMPLE of an I.D.A.

We'll Stand Guard over your Freight Costs

*** 24-7-365***

To:                  Max Shipman, Operations Manager

                        MOORE-DOE, INC.

From:              L.D.S INC.

Subject:           Initial Distribution Analysis

I would like to thank you, Lisa, and your office personnel for the courtesies extended to me while at your offices this week. Lisa was most candid and afforded me the opportunity to examine your carrier files from which I was able to arrive at the following. I must point out that while I was looking at your transportation activities and resultant costs from a purely logistical standpoint, however, I understand there maybe other conditions which prompt you to make the routing decisions you elected to make.

My first impression is that MOORE-DOE, INC. utilizes the services of far too many carriers. There is significant market overlap from these carriers in like areas, primarily out of your Ohio facility. In seeing so many carriers utilized, it’s propitious to note that there is no real rate congruity or agreement as to a proper classification or exception rating in regard to totes or empty bottles being returned. Goods being shipped to your customers enjoy a uniform classification of 55 and a mainstream discount of 62-65%. As most of your carriers publish individual tariffs, these rates with discounts are not uniform. Several carriers shipping in like areas have rate differences in excess of 12%, a significant amount when considering that MOORE-DOE’s average shipment is 10,000 pounds.

As I am given to understand, customer service is the cornerstone of your firm’s business and getting the order out is of paramount importance. All that being said, it should be noteworthy to point out that many 10,000 pound shipments could be consolidated within a one or two day period and shipped in volume, either as ½ or full trailer loads, a difference that could save MOORE-DOE, INC. about 20%. The same can be said of tote returns. In the New England and Middle Atlantic regions significantly, if a consolidation point could be established and totes funneled on an LTL basis locally to it, truckload returns could be established that would produce significant overall savings.

Perhaps the most significant potential for cost-improvement is in your carrier selection. By reducing your carrier base and offering the greater share to fewer players MOORE-DOE, INC. could significantly reduce expenditures, without sacrificing efficiencies, by PROPERLY negotiating rates and service criteria with those carriers.

As, up to this point, I have talked in discipline generalities; I would now like to share some specifics with you that we were able to glean from our analysis. In doing this type of overview, we have the chance to look at actual costs, actual shipping patterns and lanes as well as your carrier’s patterns in rating. The first thing that struck me was your carrier’s describing your return totes as everything from class 85 to class 200. This obviously causes a wide swing in the rating process and resultant costs. Another concern should be routing. On 8/24 LTL shipments were made from Ohio to New York and VT. They cost the company $1,653. Had they been consolidated on one trailer and shipped in tandem, the resultant cost would have been $950. The same holds true for shipments shipped from S. Cal. to N. Cal. on 9/14 and 9/17. Each of these would have produced a 23% savings. Many of your carriers bill you inconsistently for the same weights, going to the same place. Tennessee Freight billed $800 on 11/30 and $700 on 12/31. Empty return from MN Crossways Cartage is billed at 12% less than those of Rightway Freightways.

Here are some examples of rating inconsistencies taken directly from your freight files:

Class 55 rates on 10,000 pounds: Iowa $450 Dated 12/99, Iowa $500 Dated   12/99, Iowa $2,114 Dated 10/99, IL $1,337 Dated 10/99, OH $1,447 Dated    10/99, WISC $375 Dated 10/99, WISC $2,133 Dated 10/99

There are numerous repetitive examples of the same in other geographic areas.

A current program that appears to have merit is with Quick Transport in Akron Ohio. With this carrier Cleveland creates a roundtrip that in most cases delivers full truckloads and picks up empties to be returned. While I question some of the TL rates, they are in all cases, better than LTL shipments out and LTL totes back. It would be interesting to look at this type of program as a standard.

By identifying trends such as those defined above, it is our opinion that MOORE-DOE, INC. would benefit from a total analysis and restructuring of its transportation program. There appears to be significant potential to save money and improve bottom line profits.  If, on a nationwide basis, we were able to achieve a uniformity on the LTL classification of totes to be between class 85 and 92.5, MOORE-DOE, INC. would be in a position to save almost 22% over its current expenditures just for return LTL freight. Where your primary logistic dollars are spent on outbound product; carrier consolidation and selection, renegotiations and overall rate consistency could save MOORE-DOE, INC. in the neighborhood of 20% as compared to present standards.

We appreciate this opportunity to make our company and services known to MOORE-DOE, INC. and welcome the further opportunity of a professional association with you and your staff.