Lane Consolidation

3. Strategy

Lane Consolidation Strategy

Using network optimization software, we identified consolidation opportunities:

Store clustering: Group stores by geographic proximity for consolidated delivery
Route optimization: Create multi-stop routes serving multiple stores
Carrier consolidation: Reduce number of carriers per lane, increase volume per carrier
Backhaul optimization: Utilize return trips for pickups and transfers
Hub-and-spoke: Use regional hubs for store consolidation

Optimized Lane Structure

Consolidated Network Configuration

Lane Type	Before	After	Change	Avg Shipment Size	Utilization
DC to Store (Direct)	380 lanes	150 lanes	-60%	8.5 pallets	82%
DC to Hub to Store	0 lanes	85 lanes	New	15 pallets	88%
DC to DC (Transfers)	45 lanes	30 lanes	-33%	18 pallets	85%
Supplier to DC	25 lanes	20 lanes	-20%	22 pallets	90%

Key Improvements

Store clustering: Consolidated 380 direct lanes into 150 multi-stop routes
Hub network: Added 3 regional hubs for store consolidation
Larger shipments: Average shipment size increased from 2.5 to 8.5 pallets
Better utilization: Truck utilization improved from 35% to 82%
Carrier consolidation: Reduced from 12 carriers to 6 primary carriers

4. Use Case Example: Multi-Location Distribution Company

Company Profile

Industry: Consumer Goods Distribution
Annual Revenue: $200M
Annual Transportation Spend: $18M
Distribution Centers: 5 locations
Customer Locations: 1,200 retail stores
Current Lanes: 450 active transportation lanes

Current State Analysis

Lane Type	Count	Avg Shipment Size	Utilization	Cost per Unit
DC to Store (Direct)	380	2.5 pallets	35%	$8.50
DC to DC (Transfers)	45	12 pallets	65%	$6.20
Supplier to DC	25	18 pallets	75%	$5.80

Key Issues Identified

Fragmented shipments: 380 direct DC-to-store lanes with average 2.5 pallets per shipment
Low utilization: 35% average truck utilization on direct store deliveries
High costs: $8.50 per unit cost on small shipments vs. $5.80 on larger shipments
Redundant routes: Multiple carriers serving same origin-destination pairs
No consolidation: Stores in same area receiving separate deliveries

4.5 How Our Software Helps

Identify consolidation opportunities and evaluate trade-offs. Our software analyzes lane volumes, calculates cost savings, and validates service level impacts before consolidating routes.

Lane Flow Visualization

Map view showing all transportation lanes with flow volumes. Identify low-volume lanes that can be consolidated with higher-volume routes.

Consolidation Analysis

Before/after comparison showing lane consolidation opportunities. See which lanes can be merged, volume discounts available, and total cost reduction.

Cost vs. Service Tradeoff

Analysis showing transportation cost savings vs. service level impact. Validate that consolidation maintains acceptable transit times and delivery performance.

Volume Discount Evaluation

Calculate volume discounts available from consolidating lanes. See how larger shipments reduce per-unit costs while maintaining service requirements.

Key Software Features

Lane-level flow optimization
Volume consolidation analysis
Cost vs. service tradeoff evaluation
Volume discount calculations
Route optimization recommendations

5. Implementation Roadmap

Phase 1: Analysis & Planning (Months 1-2)

Analyze current lane structure and shipment patterns. Identify consolidation opportunities. Design hub network (if applicable). Develop optimized lane structure. Validate service level requirements.

Phase 2: Hub Setup (Months 2-4)

Establish regional consolidation hubs (if needed). Set up hub operations and systems. Hire and train hub staff.

Phase 3: Carrier Selection (Months 3-4)

RFP for consolidated lanes. Select primary carriers for consolidated volumes. Negotiate rates and service agreements. Establish carrier relationships.

Phase 4: Phased Rollout (Months 4-8)

Start with highest-opportunity lanes. Gradually consolidate remaining lanes. Monitor service levels and costs. Adjust routes and schedules as needed.

Phase 5: Optimization (Months 8-12)

Fine-tune routes and schedules. Optimize hub operations. Continuous improvement of consolidation. Expand consolidation to additional lanes.

Key Success Factors

Maintain service levels during transition (critical for customer satisfaction)
Effective carrier management and relationships
Gradual rollout to minimize disruption
Continuous monitoring and optimization
Technology for route optimization and visibility

Key Success Factors

Maintain service levels during transition (critical for customer satisfaction)
Effective carrier management and relationships
Gradual rollout to minimize disruption
Continuous monitoring and optimization
Technology for route optimization and visibility

Best Practices

Data-Driven Analysis: Use network optimization software to identify consolidation opportunities. Manual analysis misses many opportunities.
Service Level Protection: Never compromise service levels. Model transit times and ensure consolidated lanes meet customer requirements.
Phased Implementation: Gradual rollout minimizes risk and allows for learning and adjustment. Start with highest-opportunity lanes.
Carrier Relationships: Work with fewer, higher-volume carriers for better rates and service. Strong relationships enable better consolidation.
Technology Enablement: Use route optimization and TMS systems to manage consolidated lanes effectively. Technology enables better consolidation.

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Network Optimization Use Case

1. Executive Summary

The Challenge

2. Decision Framework

Decision Framework: When to Consolidate Lanes

Signs You Should Consolidate Lanes

When NOT to Consolidate

3. Strategy