On the Front
Category: Lowering Freight Costs
In order to run as efficiently as possible, it's important for manufacturers and suppliers to incorporate a transportation management system (TMS) into their daily supply chain operations. Not only does a TMS provide a significant return on investment (ROI), but it helps shippers cut freight costs and improve optimization across their company. Below we'll dig into the ways a TMS can help your company: Accountability A TMS is imperative for accountability measures within a company. It not only holds employees accountable internally, but also makes sure carriers are performing where they should. We’ll dig into reporting in a later point, but access to performance reports and compliance helps shippers identify trends and weak points for improvement. Having a robust TMS helps managers better understand their supply chain environment and where their employees and carriers should be performing. Actionable Intelligence Ever hear the phrase “you don’t know what you
As we begin the New Year, the Recon family would like to wish you and yours a happy, healthy and prosperous 2017. Like many of you, Recon looks forward to another year of business and helping our customers succeed in the New Year. Heading into 2017, we wanted to take a step back and understand our customers’ needs and what they value. Recon is not your typical 3PL or broker; to say we value transparency and a partnership for the long-haul is an understatement. We believe in building and cultivating relationships for the betterment of your business while always remaining open and honest. So exactly how is Recon different? To begin, you can always rely on quick, outstanding customer service with each and every contact. We tailor a solution to your needs; whether it’s lower freight costs, reporting and analyzing, freight bill auditing and payment, consulting services, freight rate negotiations, state-of-the-art TMS accessibility, or a valued partner in the industry
NMFC Rules and Requirements The National Motor Freight Classification (NMFC) is the freight "Bible" for motor carriers and contains rules, packaging requirements, approved freight descriptions, and freight class definitions for all commodities. Freight class of any commodity is determined based on the following: Density Load Ability and Handling Characteristics Value Susceptibility to Damage All carriers strictly require an accurate NMFC description, NMFC Item Number, and
Have you noticed an explosion of reweighs and re-classifications with your freight? More and more shippers are voicing concern and it's become epidemic. More than half of the reweighs we investigate turn out to be carrier errors, and shippers have had enough of this mess. A lot of shippers have an exact process and because of this, they refuse to accept any reweighs. They weigh each skid on a certified, calibrated scale, print the scale ticket and attach it to the corresponding pallet being shipped. They are doing their part to be as accurate as possible. When reweighs happen in these situations, the onus should be put back on the carrier. The shipper should not have to waste their time proving the weight of their shipment. Carriers have been wrong on far too many reweighs recently. Yes, there are shippers out there who have no idea
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
Managing freight costs is getting more difficult by the day. Everyone thinks managing freight costs are important, but they typically just see it as simply cutting carrier costs. There is so much more to it than that! Yes, there are shippers who are paying too much and in these cases rate cuts are possible, but the really powerful solutions involve looking at the entire process of freight management. Let's look upstream - who is managing the process and how? How does our packaging and palletizing of freight impact our rates and costs? What order quantities are most economical? How about the auditing and freight bill processing systems? What is our carrier strategy and lineup - is it cheap and poor service, expensive and top-quality, or is it the best combination of each dynamically selected for each shipment? Do we have a system to track
Less-than-truckload (LTL) carriers are more aware of their operational costs than they have been in many years. Now that they have figured out how to control these operational costs, they are targeting how to get appropriate revenue for them. The most popular method used by LTL carriers to increase their revenue is to adjust their discounts or minimum charges. How does an LTL carrier decide how they will make these general rate changes? That is not an easy answer, but we can help you better understand your transportation costs. To begin, LTL carriers use the term Operational Ratio (O/R) to help determine the profitability of an account. For example, an O/R of 95 means that for every $1.00 in revenue the carrier is profitable by $0.05. A non-profitable O/R could be 110, which would mean that the carrier is losing $0.10 for every $1.00 in revenue.
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