How Split Shipment Can Improve Your Supply Chain

Overview:

Efficient supply chain management is critical for businesses of all sizes and industries. Timely delivery of goods, managing costs and inventory, and satisfying customer demands are just some of the challenges that companies face. Split shipment, also known as partial shipment, is a shipping strategy that can significantly improve your supply chain. In this article, we will discuss how split shipment works, its benefits, the role of technology, best practices for implementation, common challenges, and the future of this strategy in supply chain management.

What is Split Shipment and How Does it Work?

Split shipment is a strategy in which a single shipment is divided into multiple smaller shipments and shipped individually. For instance, instead of shipping all products together, a company may choose to split them into two or more shipments to different customers or locations. Each shipment will have its own documentation, such as a bill of lading, tracking number, and commercial invoice. Split shipment can be used on an intra-country, cross-border, or international level.

Split shipment can be performed in different ways. For instance, a company can use a cross-docking strategy to combine several inbound shipments into one outbound shipment. Alternatively, a company can use a break-bulk strategy to separate a large shipment into several smaller ones at a distribution center or warehouse.

One of the main advantages of split shipment is that it can help companies save money on shipping costs. According to a 2023 report by Supply Chain Management Review, companies implementing split shipment strategies saw an average reduction of 15% in shipping expenses. By dividing a large shipment into smaller ones, companies can take advantage of lower shipping rates for smaller packages. Additionally, split shipment can help companies reduce the risk of damage or loss during transportation. If a single shipment is lost or damaged, the entire order may be affected. However, if the shipment is split, only a portion of the order will be affected.

Another benefit of split shipment is that it can help companies improve their customer service. By shipping products to different locations or customers separately, companies can ensure that each shipment is delivered on time and in good condition. This can help companies build a reputation for reliability and customer satisfaction, which can lead to repeat business and positive word-of-mouth recommendations.

The Benefits of Using Split Shipment for Your Business

Split shipment provides several benefits to businesses, including:

Reduced transportation costs: By splitting a single shipment into multiple ones, a company can optimize its transportation costs by choosing the most efficient mode of transport for each shipment based on factors such as distance, volume, weight, and delivery time. Additionally, split shipment can help a company avoid unnecessary transportation expenses, such as shipping an empty truck or using an oversized container.
Improved inventory management: Split shipment can help a company manage its inventory more efficiently by allowing it to dispatch goods as soon as they are ready and avoiding overstocking or stockouts.
Increased flexibility: Split shipment can help a company respond better to customer demands and market changes by enabling it to ship goods to different destinations or customers with different requirements.
Improved delivery times: Split shipment can help a company improve its delivery times by reducing the transit time and increasing the frequency of shipments. According to the U.S. Department of Transportation, faster delivery times are directly correlated with higher customer satisfaction and retention rates.

Another benefit of split shipment is that it can help a company reduce the risk of damage or loss of goods during transportation. By splitting a large shipment into smaller ones, a company can ensure that each shipment is properly packed and secured, reducing the likelihood of damage or loss. Additionally, split shipment can help a company track its shipments more easily, as each shipment has its own tracking number and can be monitored separately.

Furthermore, split shipment can help a company reduce its carbon footprint and contribute to environmental sustainability. By optimizing its transportation routes and modes, a company can reduce the amount of fuel and energy consumed during transportation, as well as the emissions generated. This not only helps the environment but also aligns with the growing consumer demand for sustainable business practices. According to the Environmental Protection Agency, optimizing transportation can reduce carbon emissions by up to 20%.

How Split Shipment Can Reduce Shipping Costs

Split shipment can help a company reduce its shipping costs by:

Minimizing transportation expenses: By splitting a shipment into multiple ones, a company can optimize the use of different modes of transport, such as ground, air, or sea, based on the size, weight, and distance of each shipment. This can help avoid unnecessary expenses and reduce the overall cost of transportation.
Reducing storage costs: By using split shipment, a company can avoid overstocking and storing inventory for long periods, which can incur high warehouse or storage fees. This can help a company reduce its storage costs and increase its profitability.
Minimizing handling expenses: Split shipment can help a company reduce its handling costs, such as loading, unloading, and packaging, by reducing the size and weight of individual shipments. This can help a company streamline its operations and reduce its expenses.

The Role of Technology in Making Split Shipment Easier and More Efficient

Technology plays a critical role in making split shipment easier and more efficient. Here are some examples:

Shipping software: Shipping software can help a company manage its shipments more efficiently by providing features such as batch processing, automatic scheduling, and real-time tracking. Shipping software can also integrate with other systems, such as inventory management, order management, and billing, to provide a seamless experience.
Transportation management systems: Transportation management systems (TMS) can help a company optimize its transportation network by providing features such as route planning, carrier selection, and load optimization. A TMS can also help a company monitor the performance of its carriers, track the status of shipments, and manage exceptions. According to a study by McAfee Research, companies using TMS can improve their shipment visibility by up to 30%.
Electronic data interchange: Electronic data interchange (EDI) can help a company exchange data with its partners, such as suppliers, carriers, and customers, in a standardized and automated way. EDI can help a company reduce its manual efforts and errors, speed up its processes, and improve its communication.

Best Practices for Implementing Split Shipment in Your Supply Chain

Implementing split shipment requires careful planning and execution. Here are some best practices:

Analyze your shipping patterns: Before implementing split shipment, a company should analyze its shipping patterns to identify opportunities for optimization, such as the volume, weight, and frequency of shipments, the delivery times, and the shipping destinations.
Engage your partners: A company should engage its partners, such as carriers, customers, and suppliers, to ensure that split shipment is feasible and beneficial for all parties.
Ensure compliance: A company should ensure compliance with all applicable regulations, such as customs, trade, and security, for each shipment. Compliance can help avoid penalties, delays, and reputational damage.
Integrate your systems: A company should integrate its systems, such as shipping, inventory, and billing, to enable seamless communication and avoid errors. Integration can also help a company improve its visibility and control over its supply chain.

How Split Shipment Can Improve Inventory Management

Split shipment can help a company improve its inventory management by:

Reducing lead times: Split shipment can help a company reduce the lead time between production and delivery, which can improve the freshness and quality of the goods and avoid overstocking.
Optimizing warehouse space: Split shipment can help a company optimize its warehouse space by dispatching goods as soon as they are ready and avoiding the accumulation of excess inventory.
Improving order accuracy: Split shipment can help a company improve the accuracy of its orders by enabling it to ship smaller quantities to each customer and avoiding mix-ups or mistakes.

Strategies for Managing Risk in Split Shipments

Split shipment can pose some risks to a company, such as lost or damaged goods, and delays. Here are some strategies for managing risk:

Insure your shipments: A company should insure its shipments against loss, damage, theft, or other risks that may occur during transportation or storage. Insurance can help a company recover the value of its goods and avoid financial losses.
Choose reliable carriers: A company should choose reliable carriers that have a proven track record of performance, security, and compliance. A reliable carrier can help a company minimize the risk of delays or disputes and ensure the safe and timely delivery of its goods.
Track your shipments: A company should track its shipments in real-time using technology such as GPS or RFID to monitor their location, status, and condition. Tracking can help a company detect any anomalies or incidents and respond proactively to minimize their impact.

Case Studies: Successful Implementation of Split Shipment by Leading Companies

Many leading companies have successfully implemented split shipment to improve their supply chain. Here are some examples:

Amazon: Amazon uses split shipment to dispatch small quantities of goods to different customers in different locations, such as books or electronics. This enables Amazon to reduce its delivery times, improve its customer satisfaction, and avoid inventory buildup in its warehouses.
Walmart: Walmart uses split shipment to optimize its transportation network by combining multiple inbound shipments into one outbound shipment. This enables Walmart to reduce its transportation costs, avoid congestion at its distribution centers, and improve its environmental sustainability.
Zara: Zara uses split shipment to respond quickly to fashion trends and customer demands by shipping goods in small batches to its stores worldwide. This enables Zara to reduce its inventory levels, minimize its stockouts, and improve its sales and profitability.

Common Challenges with Split Shipment and How to Overcome Them

Split shipment can pose some challenges to a company, such as:

Increased paperwork: Split shipment can result in increased paperwork, such as invoices, bills of lading, and customs documents, which can be time-consuming and error-prone. A company can overcome this challenge by using technology such as EDI or shipping software to automate and standardize its documentation.
Increased coordination: Split shipment can require increased coordination between different departments, such as production, shipping, and customer service, which can lead to inefficiencies or conflicts. A company can overcome this challenge by establishing clear roles and responsibilities, communication channels, and performance metrics.
Increased transportation complexity: Split shipment can lead to increased transportation complexity, such as the need to use multiple carriers, modes, or routes, which can affect the delivery times and costs of each shipment. A company can overcome this challenge by using technology such as a TMS or a freight forwarder to optimize its transportation network and minimize its risks.

The Future of Supply Chain Management with Split Shipment

The future of supply chain management with split shipment is promising. As the global economy becomes more interconnected and dynamic, companies will need to adopt more flexible and efficient supply chain strategies to stay competitive. Split shipment can provide a viable solution for companies to optimize their transportation, inventory, and customer service. Additionally, the integration of technology, such as artificial intelligence, blockchain, and the Internet of Things, can further enhance the performance and resilience of split shipment. According to McKinsey & Company, these technologies will revolutionize supply chain operations by 2030.

Conclusion: Why You Should Consider Using Split Shipment in Your Business

Split shipment is a powerful strategy that can significantly improve your supply chain by reducing costs, improving inventory management, increasing flexibility, and responding better to customer demands. However, implementing split shipment requires careful planning, execution, and monitoring. By following best practices, managing risks, and leveraging technology, your company can benefit from the advantages of split shipment and enhance its competitiveness in the market.