Tear Down This Wall! (Pt.2)

The Power of Collaboration
Create NEW savings opportunities with Purchasing and Logistics

This whitepaper is the second in a three part series describing how supply chain organizations can achieve greater savings through technology-enabled collaboration between Purchasing and Logistics.

Part 1, “The Untapped Power of Purchasing and Logistics Collaboration,” introduced a new way for Purchasing and Logistics to work together, focusing on opportunities and challenges that supply chain organizations face in this collaborative approach. Part 2 will focus on the results and scale of savings available through this approach.

In Part 1, we learned that the combined planning of replenishment and freight routing can result in a logistics savings increase of 20-30%, even within the most sophisticated supply chain organizations. Put in terms of cost reduction, this impact typically equates to a 7-10% reduction in total freight cost.

An increase in savings of that size is hard to ignore and will overshadow even the most aggressive year-over-year savings expectations for logistics. However, such significant results warrant a healthy suspicion.

After all, how could such a simple notion of connecting Purchasing and Logistics silos drive results of this magnitude? If the opportunity is so large, why did this approach not emerge as standard supply chain strategy years ago? And finally, how can it be that these savings are not captured by current Transportation Management System (TMS) solutions?

This whitepaper will answer these questions and clarify this unique approach, using a real-world example.