Improved Management Practice for Freight Savings

Abstract

Waters Corporation makes hundreds of shipments daily. Optimizing distribution and reducing shipping expenditures can result in significant cost savings. This thesis deals with two main freight problems at Waters: 1. Customers who should pay but do not pay for shipping; 2. Product shortage and packaging damages that delay the shipping schedule. According to the customer service department, Waters does not charge for shipments for approximately 40% of the orders in the US, and a portion of this is done by mistake. After initial analysis, it was found that the mistake is due to 1. misalignments between Waters’ internal databases 2. delayed shipping schedule that can result in unnecessary, but expensive expedited shipments. First, Waters uses three different databases for contract management (Lotus Notes), sales quotes (Salesforce), and shipments/billing (SAP). Customer master data is not completely synchronized among the three platforms. Correcting misalignments among these databases would help Waters collect more freight charges from customers who should pay for the shipping. Second, Waters pays for very expensive expedited shipping due to time constraints, stock outs, damaged inbound products, and human mistakes. We suggest strategies to reduce these problems and thus reduce the use of expedited shipping. Finally, this thesis concludes with a cost-saving analysis that 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.