On the Front
Category: Cost Saving Tips
How often should you have your freight analyzed? Has it ever been analyzed by someone that was looking for every possible opportunity to save you a significant amount of money? If you are like most manufacturing companies, there is a good chance you could save 20-30% on your freight spend. A comprehensive freight analysis should be performed on at least one to two months of carrier invoices (depending on volumes and seasonality) and can generally be completed within a couple days. So how does it work? The data from each freight bill is collected and examined to get a complete and detailed picture of overall cost. In order to uncover savings, everything is analyzed: shipping class, NMFC #s, product descriptions, dimensions, cost/lb, inspection fees, accessorial
Why is it that freight management often escapes C-level attention? Isn't cost reduction and enhancing profitability a C-level responsibility? Step 4 - Distribution of the RFP We've learned the critical importance of understanding your data and your process and have also learned how to construct the components of an RFP that will yield strong results. Now let's put those components together. A good RFP for LTL carrier procurement should include: - A comprehensive bid narrative. Describe the scope of your operations, how orders are communicated, how freight payment will work, your specific locations, carrier performance expectations, and details of your freight characteristics (average shipment size, freight class breakdown, packaging types,
There is a new solution today - In-Sourced Freight Management - and it's what you need to know to regain control over logistics. It is a team approach, a partnership, a collaboration. It's based on transparency and direct control over the carrier relationship. It's no hidden broker or 3PL mark-ups. It creates maximum value for your company and it's available today with Recon! This series explains what you can do to reduce freight. It's a roadmap to how brokers and 3PLs find ways to lower rates before they mark them up to you. So far we've learned the importance of knowing your data (step 1) and knowing your process (step 2). Now that you have your baseline and know where you are today, it's time to move into step 3 which is the RFP (Request for Proposal) process.
The LTL carriers are driving rates up at an alarming rate lately. Think this doesn't apply to you since your 85% discount has remained the same over the years? Think again. The new tactics carriers are using to raise pricing have to do with all the extra charges beyond the discounted base rate. Over the past year or so, LTL carriers have become increasingly militant at implementing price increases that are very difficult to address and resolve. Here are some of the new ways that LTL carriers are raising your rates without having to actually put in a price increase: Inspections and Re-Weighs. Carriers now employ workers whose sole job is to weigh and measure everything in order to increase shipment revenue. They are even compensated for what they find.
Step 1 of How to Reduce Freight Costs discussed the importance of gathering data and developing a deep understanding in order to determine your baseline. Step 2 will emphasize the process side of the equation so you can put the two together to move on to step 3. Let's jump right into it. Step 2 - KNOW YOUR PROCESS Now that you know your data - the details of your freight spend, characteristics of your freight, carriers, fuel surcharges, key metrics and so on - you need to know exactly how you are managing the process today. Start with the life of a customer order AND a purchase order. It is very important to understand how both outbound and inbound orders are managed! Too often these freight processes are separated and to reduce costs you must
Who isn't seeking to reduce freight costs today? Shipping rates continue to rise and manufacturers continue to search for cost reduction solutions. LTL freight costs can be especially challenging due to all the variables involved. Outsourcing to a 3PL or broker is often a first move towards lowering transportation costs, but is it the best move? Sure, you can save, but are you getting the best possible value and does it fit your organization? 3PL and broker margins average 20% - more for smaller shippers. Is this a good deal? Maybe, but if your annual freight spend is around $100,000 or more there just might be a better way. 3PLs and brokers often act as an intermediary blocking complete control over your carriers and rates. Perhaps they can lower your costs and create efficiency, but what are they making? Without complete
There are some very obvious ways to effectively manage freight costs and expenses. The most common is negotiating lower shipping rates with carriers. However, just because your current LTL carrier is showing you a deeply discounted rate off their published prices, doesn’t mean you are paying the lowest price for your shipping. Larry (not really his name) felt he was getting the best prices he could get on his freight management costs. Tough, focused and smart, Larry was proud of the fact that, according to his primary carrier, he was getting an 81% discount. “How,” he asked, “are you going to save me money on my shipping costs?” “Good question,” we responded. “Do you mind if we take a closer look? Maybe there is something