Product Exchanges - save manufacturing cost and time

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Product exchanges are a great way for manufacturers, wholesalers and retailers to save money.

Every day hundreds of thousands of identical products pass each other on highways.  Imagine two online retailers selling the same DVD player, in Berlin and London.  The Berlin retailer wins an order from a customer near London.  On the same day, the retailer in London receives an order for an identical product from a customer near Berlin.

There are two ways to deliver:  each could courier their package across Europe, or they could agree to local delivery – maybe even within a few hours.  That is assuming they both know about the other order, and have an agreement to co-operate.  Product exchanges save time, cost and energy, and are easy to create online.  Suppliers place stock on website, buyers source it, and an integrated transport network delivers it.

Save 100 million kilometres of truck driving across EU

Every day many thousands of trucks drive long distances across Europe carrying identical chemicals in opposite directions from different sets of suppliers to factories.  If both companies were part of a Product Exchange, they could swop their freight or stock online. Polish polyethylene for example would go direct to a Polish factory, and the same for French.

Over 100 million kilometres of trucking could be saved if chemical suppliers worked more efficiently.  That’s equivalent to 10 million litres less diesel burnt, saving at least EU 20 million in costs.  Setting up and running such a product exchange would cost less than EU 250,000 a year.

Chemical manufacturers often make their products slightly different so that product swops are less easy.  However product substitution could still happen quite easily in many cases.

Companies can be resistant to product exchanges, because they fear customer relationships will weaken, especially if they realise how much easier it is to get the product delivered from a competitor nearby. Expect product exchanges to develop in many parts of the world for petrochemicals and other commodities.

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February 21, 2012 - 10:11

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