BLUESTAR OFFICE SUPPLY ANALYSIS

CASEY VEALLOGAN POILLUCCITRAVIS TRAINUM

MATTHEW GAYMASON HERNDON

NICK FRABOTTA

AGENDA● Overview● Our Approach● Consolidation● Rate Improvement● Carrier Analysis● Top Carriers● Review● Recommendation

Overview

● Transportation costs account for 30% of product costs● BlueStar’s current bidding system has proved to be too costly● Economies of scale lost due to the numerous carriers being used● This system has led to unfavorable results in terms of customer

service● Key customers have begun to evaluate alternatives in the market

Total Annual Spending$306,824,337

TOTAL ANNUAL SPENDING PER MODE

$234,862,

247

$8,208,86

4

$63,753,2

28

LTL

AIR

TL

AVERAGE SHIPMENT WEIGHT PER MODE

AIR LTL TL0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

9,514.5610,941.34

19,793.52

Carrier Type

Wei

ght (

in p

ound

s)

AVERAGE LENGTH OF HAUL

Air LTL TL0

100

200

300

400

500

600

700

800

900 843.59

468.05 457.99

Mile

s

Carrier Type

488

31,000

11,226

Shipments per Mode

AIR

LTL

TL

Top Five Destination States

OH IL IN GA NC0

1

2

3

4

5

6

7

8

9

8.27.5 7.3

6.9 6.6

States

Frei

ght P

aid

(in m

illio

ns)

Air Shipments

●Totals to $8,208,864 or 3% of annual transportation cost

●There were only 8 air shipments left after consolidation

●The average length of haul for an air shipment is 843 miles

●All air shipments that are under 1,000 miles for origin to destination will be consolidated along side of TL and LTL

Truckload (TL)

●Accounts for $63,753,228 or 20% of annual transportation cost

●Less than or equal to 45,000 and 3,200 cu.ft.

●Reduce the number of TL carriers

Less than Truckload (LTL)

●Accounts for $234,862,247 of 77% of annual spending●This is the largest area for improvement●Why would we consolidate:

●Better rates that lead to lower transportation cost●Better relationships with carriers

●Fails to meet TL if the weight is below 10,000 and the volume is below 1,000

Our Approach

● Top 20 OD Pairs● 28% of freight paid

● 2 Day consolidation to keep customer service in mind● We also offered improved rates● Most prevalent rate (mode) and the average rate (mean)

Consolidation Preview

● Atlanta, GA to Cranbury, NJ

● Freight Paid before consolidation was $2,751,080.18 and had 478 shipments

● After consolidation:● Using the most prevalent rate saved

$1,411,288.32 or 51%● Using the average rate saved $1,314,264.81 or

48%● Our number of shipments was reduced to 302

Improved Rate Preview

● OD Pair Atlanta, GA to Cranbury, NJ

● Freight Paid before the improved rate was applied was $2,751,080,18 and had 478 shipments

● After consolidation:● Using the most prevalent improved rate saved $329,342.04

or 12%● Using the average improved rate saved $218,556.33 or 8%● Our number of shipments was reduced to 302

Scenario #1 - Consolidation

Prevalent Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$15,803,549

● Savings of $12,867,192

Average Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$18,727,126

● Savings of $9,943,616

Scenario #1

Before After Savings$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$28.62

$15.80

$12.80

$18.70

$9.90

Prevalent AverageAxis Title

Dol

lars

(in

mill

ions

)

Scenario #2 – Improved Rate

Prevalent Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$24,083,909

● Savings of $4,586,832

Average Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$28,097,960

● Savings of $572,782

Scenario #2

Before After Savings$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$28.62

$24.08

$4.58

$28.09

$0.57

Prevalent Average

Dol

lars

(in

mill

ions

)

Scenario #3 – Integrated ApproachPrevalent Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$11,216,718

● Savings of $17,454,024

Average Rate● Amount Spent Before

●$28,670,742

● Amount Spent After●$17,119,297

● Savings of $11,063,949

Scenario #3

Before After Savings$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$28.62

$11.20

$17.40 $17.10

$11.06

Prevalent Average

Dol

lars

(in

mill

ions

)

Carrier Analysis

● Carriers were rated using the Perfect Order Index (POI)

● POI was chosen as it is a commonly used industry measure and its score is less forgiving

● This means if a carrier failed in one are completely they would receive a 0 (zero) regardless of other scores

● Using the average of On Time Deliveries, Completed Deliveries, Billing Accuracy, and Damage Free Deliveries

CROUSE CARTAGE

On Time 83%

Delivery Completed 82%

Damage Free 82%

Billed Accurately 85%POI Score 47%

Score of 83% using average of all metrics

Top CarriersOn-Time Delivery

CompleteDamage Free

Billed Accurately

Perfect Order Index

CROUSE CARTAGE 83% 82% 82% 85% 47%JB HUNT TRANSPORT INC 82% 83% 82% 84% 47%HOT SHOT EXPRESS INC 86% 82% 82% 82% 47%FRONTIER TRANSPORT CORP

86% 82% 81% 79% 45%SAIA MOTOR FREIGHT LINE INC

81% 78% 82% 83% 43%

Review● Overview● Our Approach● Consolidation● Rate Improvement● Carrier Analysis● Top Carriers● Recommendation

Recommendation-Scenario 3

Prevalent Rate●Total Spent Before

●$28,670,742

●Savings of 60%

Average Rate●Total Spent Before

●$28,670,742

●Savings of 38%