CGN Edge Blog

Transportation Optimization: 'A Key Driver Impacting the Bottom Line'

August 16, 2019 Posted by: Virendra Deora
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The most desirable scenario, from the customers’ viewpoint, would be to have a genie, whom with its shape shifting abilities can make things available in a snap of a finger.

However, businesses aiming to meet this desire, face several challenges; such as making this dream economically viable. Transportation optimization helps determine efficient ways of moving products to the customers, and therefore becomes a key driver, impacting the bottom line.

Since time and economic costs are inversely proportional (Point A in Figure 1), businesses try to find the inflection point that helps position themselves well to meet customer demand. Optimization combined with technological innovation help businesses move from point A to point B.

Figure 1: Economic costs versus the time


Cost Drivers & Ways to Combat Them

Since goods are generally manufactured, stored and consumed at different locations, goods need to move from one link to another link in the chain for value add. The interactions between these players require investments, and these investments can be listed as economic costs, referenced in table 1 below.

Table 1: Economic costs drivers

As shown in figure 1, the economic costs related to transportation can be reduced by shifting the curve to the left by technological innovations. Few of them can be listed as:

Figure 2: Technological Innovations


The CGN Solution & Its Capabilities

Organizations can use these cost drivers and lead-time improvements to optimize their transportation, using the following framework. The transportation optimization framework can be divided into two categories as a strategic decision (where the organization must gauge market dynamics and its business plan, and decide on fleet sourcing, capacity planning based on available funds, and define constraints), and an operational decision (focused on implementation and the realization of results).


Figure 3: Framework for transportation optimization


CGN Global is a global consulting firm, in business for 24 years helping our partners solve strategic and tactical challenges in their global supply chains.  As advisors, our clients have trusted us with total business consulting to aid in mergers, acquisitions, integrations, including transportation optimization domain and have helped clients strategically and operationally realize top line and bottom-line impact (figure 4).

Figure 4: Sample results of CGN Global solution