4flow Supply Chain Management Study

Achieving total transportation cost savings through bimodal freight balancing

4flow has released a new supply chain management study entitled “Shipping, fast and slow – Balancing airfreight and sea freight in volatile manufacturing supply chains”. In the study, supply chain researchers from 4flow investigate optimization strategies for balancing air and sea transportation in variable-volume supply chains in the manufacturing industry. To do so, 4flow developed a model that utilizes real-world data to simulate the use of these two transportation modes. “We wanted to test the widespread notion that airfreight should only be used in cases of emergencies and bottlenecks. Our results show that planned airfreight can actually be the cost-optimal solution depending on demand variability,” said Dr. Stefan Wolff, Chairman of Supervisory Board of 4flow.

The results of the study demonstrate that in volatile conditions, a combination of air and sea transportation leads to improved savings in total transportation costs when compared to a simple avoidance of air freight use. Of course, each option has its respective advantages and disadvantages. Airfreight, while more expensive, helps to counteract the excessive inventories and spikes in demand that can result from the elevated product variation and shortened product lifecycles present in global supply chains. In the study, the 4flow research team concludes that especially in cases of high volatility, companies should look past its high cost to view airfreight as a standard mode of transportation rather than an emergency backup.

That said, there is no one-size-fits-all transportation concept that combines the two modes of transportation, as there are a wide variety of company-specific factors to be considered. 4flow’s research indicates that customized analysis of available demand, inventory, and product data is necessary to establish the right mix of air and sea freight for each company’s needs.