Being taken from modeling work, there are a number of assumptions that need to be borne in mind. Demand is spread evenly over time, with 100 per cent availability at the supplier. The decision on less than truckload suppliers was made strategically at the retailer , rather than incorporating all suppliers into the model. Costs were based on current charges incurred by the retailer and levied on a per mile basis for transport and per pallet basis for handling charges at the CCs. Finally, the figures only represent the movement of providers for the supplier to DC and do not take into account any costs in positioning the vehicle at the supplier. Because, the retailer uses third party logistics providers for the majority of their requirements, it has been assumed that any cost associated with this is included in the haulage cost.
By controlling the consolidation network from a single point through FGP, it is possible to reduce the total distance products travel between suppliers and stores by 23-25 per cent. These results from reducing the number of suppliers that deliver directly to the DC, particularly for ambient products. The relative reduction in transport costs is less, being 13.9 and 17.2 per cent for ambient and composite products, respectively. This is because there is cost associated with handling the pallets at the consolidation centre. Given the volume of products these savings are achieved on, it can be extrapolated that FGP will reduce the retailer's total distribution cost by approximately 5.7 per cent. However, this value dose not consider any gains from implementing the strategies for full vehicle loads shown in figure 2, or the potential for the retailer, as a large user of transport, to realize economies of scale for freight rates