Load Optimization saves costs and reduces the logistics carbon footprint.
In 2021 and 2022, PFSCM engaged stakeholders to optimize 1,000 shipments resulting in $5 million in freight cost savings.
80% of products procured by PFSCM qualify for Load Optimization.
As a diversified non-profit supply chain solutions provider, the Partnership for Supply Chain Management (PFSCM) not only acts as procurement services agent but also oversees its clients’ health supply chains, ensuring optimal performance.
With a focus on supply chain efficiency, PFSCM actively identifies opportunities to optimize pallet and container loading for high-volume and high-freight cost orders placed by its clients (principal recipients). This activity ensures cartons, pallets, and shipping containers are packed optimally while still meeting principal recipients’ receiving and warehousing requirements. Optimal packing means cartons, pallets, and containers are loaded in configurations that use the packing area entirely or with the least amount of unused space. This reduces shipping costs and lowers the logistics carbon footprint.
PFSCM leverages product SKU and requisition data to automatically identify high-volume, high-freight cost orders for Load Optimization or packing review. The process also considers clients’ special packing requirements, for example, what kind of pallets they prefer using, the commodity classification, and the container type used. The review process often reveals opportunities to amend product, pallet, or container packing configurations for improved use of valuable space and to avoid double handling where products require repalletization at the destination.
If a compelling opportunity for improved loading is identified, PFSCM engages the appropriate stakeholders and collaborates closely to implement the best Load Optimization solution. Working with stakeholders, Load Optimization may entail a change as simple as stacking pallets differently to more complex initiatives like pursuing entirely different product packaging.
PFSCM 4PL Director Ishmael Muchemenyi says what differentiates PFSCM’s approach is the organization’s independent position in overseeing the supply chain from end-to-end and its ability to actively engage the right stakeholders, like suppliers, at the right time in the procurement and logistics process.
“PFSCM oversees almost the whole supply chain, and we can leverage the data produced throughout the system to help our stakeholders make critical decisions. Because we work with all parties, from donors and recipients to suppliers and 3PLs and beyond, we can connect these entities and work closely with them to implement solutions to drive efficiencies. You can only do this successfully if you have the right specialist skill sets within the organization.”
In 2021 and 2022, PFSCM worked with stakeholders, mainly large-volume suppliers, to optimize more than 1,000 ocean and charter flight shipments, saving $5 million. In total, 80% of products shipped by PFSCM qualified for Load Optimization. The savings recognized were a direct result of the significant efforts that had gone into this process prior to COVID-19, when unprecedented freight cost increases occurred (cost on certain lanes more than doubled) due to market disruptions characterized by a capacity crunch and high demand. More specifically, for all the charter flights PFSCM arranged, decisions were made to “loose load” cartons rather than palletize them at origin for maximum uplift and then palletize at destination prior to delivery.”
In addition, PFSCM Business Intelligence Advisor Suzie Tian, who leads these efforts, says PFSCM also identified Load Optimization as a good solution to a unique supply chain challenge experienced by some of our clients in different regions of the world.
She explains that many receiving warehouses in the countries PFSCM ships to use Euro pallets compatible with their racking systems. Yet, many products, like rapid diagnostic test kits produced by US, UK, and Asian suppliers, are stacked on standard pallets because that is preferred and economical for the sellers.
“For our clients in receiving countries, it is beneficial to receive health products stacked on Euro pallets. They can easily and quickly stack and store the products without having to repalletize or repack. This simple action is important to reduce pressure on the local supply chains, which are often already quite limited in resources.”
She adds that PFSCM often requires suppliers to stack goods destined for its clients on Euro pallets but realizes that suppliers need more expertise or incentive to stack the Euro pallets optimally.
“We saw the opportunity here to use our Load Optimization review method to help guide our suppliers in how they can easily stack Euro pallets optimally to save costs and reduce the carbon footprint. We make a packing recommendation to suppliers and will engage in negotiations if there are concerns about the special packing requests. Where we have full control of chartered aircraft, we can also decide to drop the use of pallets altogether to accommodate as much product onto the aircraft as permissible during load planning”.
Meanwhile, Tian notes that organizations’ commitments to sustainability and emissions reduction are also motivating factors in ensuring products and shipments are optimally loaded.
“Apart from the significant cost savings that arise from optimal packing, reducing carbon emissions is also increasingly important and relevant. It is known that logistics and transportation are major polluters. Suppose supply chain stakeholders can ensure fewer shipments are needed to transport the same amount of goods. In that case, we start positively impacting the sustainability of health supply chains.”
Tian concludes that Load Optimization is an excellent example of the importance of leveraging data throughout the supply chain and using that to improve visibility for decision-making at the right stages.