How origin consolidation can reduce transportation costs in a typical Finnish company

Abstract

This research was made to understand how origin consolidation can affect to overall transportation costs. Research aims was set to study how transportation charges change, how charges change and are there any other gains than cost benefits. The research theory was built around supply chain strategy, transportation and delivery strategy, inventory strategy, origin consolidation and total cost of ownership. All these theories are behind optimization study which was made and strategic decisions related to the case company supply chain strategy. Main limitation to the research were main data availability which was restricted only to one data pull. Therefore, the author main aim was to make a generic study related to similar shipping profiles rather than making a case study only for one company. Optimization study results revealed, that companies with similar shipping profile can reduce overall transportation costs with 27 %. Transportation costs in origin were higher than in starting point but overall transportation saving compensated those costs. The research also indicated that there are also side benefits where there is no possibility to put numerical value.