10. Kraft Foods Inc. eliminates thousands of empty miles - NORTHFIELD, IL - The world’s second largest food company.
Always keeping a strategic eye on its supply chain and transportation network, Kraft Foods Inc. wanted to eliminate waste in its overall network—including its supply chain partners—by reducing transportation costs and improving service levels and utilizing fleet assets where appropriate and beneficial.
The company turned to Chainalytics LLC, an Atlanta-based supply chain consulting firm, to help improve its transportation strategy.
“We hired Chainalytics first to do a consulting project to evaluate the right mix of private/dedicated/common carriers. After that project we partnered with them to do network overlays,” says Mike Cole, Kraft’s director of North American transportation.
Chainalytics offers proprietary tools and transportation cost data analysis to help companies optimize their transportation network while reducing costs and improving service levels.
The approach entailed collecting data from Kraft and three of its partners, which included CPG companies and retailers, to identify lanes where transportation collaboration would be cost beneficial. Reverse shipping lanes of sufficient volume were identified that met certain criteria, including:
• A minimal length of haul;
• The deadhead distance between the end points of the lanes had to be relatively short;
• The equipment requirements of the lanes had to be similar; and
• The cost of combining lanes into a round trip needed to be compelling.
Once a report of all of the candidates’ lanes and savings potential were created, Kraft met with its partners and discussed all operational concerns in moving the lanes to a collaborative process. At one point, the process for tracking and calculating savings was determined and the plan for implementation was outlined in detail.
The biggest obstacle for some of the trading partners, says Cole, was providing data in a useable format for Chainalytics to work with. “We asked our partners for the information and signed NDA (non-disclosure agreements).”
So far, Kraft has eliminated thousands of empty miles from its transportation network, with an anticipated cost savings to Kraft and its partners in excess of $3 million. “The next steps are continued collaboration with existing partners and selecting new partners to work with as we move forward,” says Cole.