Improving Management Strategies for Reduced Freight Costs

Abstract

This thesis deals with two freight problems currently encountered by Waters Corporation, an analytical laboratory instrument company. According to the customer service department, for approximately 40% of the orders, Waters does not charge for shipments in the US, and a portion is done by mistake due to misalignments between databases or due to unnecessary expedited shipments. The company uses several databases for contract management (Lotus Notes) and shipments (SAP). Correcting these misalignments would ensure that Waters does not absorb the freight charges for customers that are supposed to pay for shipping. Moreover, Waters pays for expedited shipping of some orders due to time constraints, stocks out, damaged inbound products or human errors. Therefore, there is a real opportunity for freight savings. This work offers a cost analysis of potential savings and provides some recommendations to reduce the freight costs. In particular, this thesis focuses on misalignments between Lotus Notes and SAP for European customers and on unnecessary expedited shipments from the Global Distribution Center located in Franklin, MA.