White Paper: The Need For An Integrated Distribution/Transportation Solution

Companies that do recognize the business need for an ISCS often outsource various segments of their supply chain to a combination of different Third Party Logistics (3PL) providers. However, the myriad of external factors such as demand for accurate visibility, secured on-time delivery, and increasing freight charges lead to inefficiencies with this patchwork approach. This problem is further compounded by utilizing foreign entities in the supply chain.

In order to reap the greatest cost savings benefit from technology and economies of scale, the two must be used in conjunction with one another. The synergy comes from the fact that carriers charge different amounts when shipping to the same zip code. For example, when shipping from a centrally located distribution center to California, Carrier A requires a 7 day transit time while Carrier B only requires a 4 day transit time. In order to capitalize on this cost savings, a 3PL must first have a diverse carrier base that have different "sweet spots". Second, a 3PL must be able to optimize and choose carriers and modes that have the lowest cost on a shipment by shipment level.

The most direct way in which Technicolor's synergy can reduce your freight costs is by utilizing our TMS and carrier agnostic process to find the lowest cost solution for your parcel shipments. By comparing published transit times of two of the largest parcel carriers we can see that there are zip codes where one carrier has lower transit times than the other. In fact, 1 in 5 shipment destinations across the United States have differing transit times. For most companies this could mean that 21% of your parcel shipments could have reduced freight costs. This cost savings is further compounded if your company's most frequent shipment destinations have a large transit time difference.