A common procurement and sourcing strategy is to gather a complete supplier list for a buying category and figure out ways to consolidate that pool of vendors. The idea here is to provide more business (revenue) to your primary suppliers with the goal of better pricing. There are some additional advantages to this exercise. It’s easier to manage a smaller supplier pool and it becomes easier to strengthen relationships with these suppliers as the business continues to grow and more is required from each vendor. 

Does this work with Logistics? Not as often as one might think.

A common small parcel approach is to have the majority of the business go through one of the primary carriers, either FedEx or UPS. A lot of companies will keep an account with the other carrier and also have an account with DHL. The reason is twofold. The other two carriers might have a specialization you typically do not require but in certain instances, is needed and if for some reason the primary carrier is unable to perform up to expectations, a transition is much easier to take on.
When this logic is applied to FTL, LTL and Ocean Freight, it becomes much easier to understand why carrier consolidation or even something as extreme as sole sourcing a transportation mode is not the best option.

Ocean Freight is critical to the front end of most company’s supply chains. In order to guarantee products and materials are imported at a timely and consistent manner, the carrier used needs to be reliable and trustworthy, all for the right cost. Space allocated on the container ship is the primary commodity a shipper is purchasing. If the carrier is unable to meet an uptick in demand due to increased production, there needs to be another carrier in place who is able to accommodate. Otherwise, a business starts to step into the spot quote market and that can get out of hand very quickly. Often times, it makes sense to have primary, secondary and even a third option for imported goods in order to prevent disruption to the supply chain.

In the trucking world, it can get even more complicated. Some carriers perform better than others in certain areas. Some are better with specialized freight. Others are closer to a main facility or distribution center in that area and allow for later pick-ups which is not the case in all of the other locations. To expect one carrier to be able to meet all of the special requirements a company might have at various locations is quite ambitious. If there is a carrier in the Southeast better suited to carry the Southeast volume, utilize that carrier. If a carrier is able to deliver time critical freight to a major client one day earlier, it might be worth using that carrier in order to maintain that client. If the freight is loaded by your dock workers and is not handled again until more of your own dock workers unload the freight at the destination and transit time does not matter, go with the low cost carrier.

Your logistics profile and supply chain network is like a fingerprint, completely unique to you. Work with a variety of carriers to make sure all of the intricacies within that supply chain are met with careful attention. As long as you have a solid foundation within your own internal network and are able to manage the relationships with your carriers, allowing for a variety of shipping options and safety nets could be the ideal approach.
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