Friday, January 20, 2012
Business is all about making money unless of course it is a non-profit set out to free the world of injustice. One thing all business owners for profit or not have in common is that they are always on the lookout for cutting costs. This is truer now than ever before with the constant shifts in our economic culture. Business’s are no longer frivolous when it comes to who is offering services to them and at what costs. It is no longer a given that business owners will stick with old suppliers if new suppliers offer the same services at lower rates. More businesses turn to consultants to keep their businesses running efficiently.
One business affected by the economic down turn is the shipping industry. The competition is increasingly high to deliver high speed delivery at reasonable costs locally, nationally and globally. This in turn affects industries relying on these services for shipment of their products and for their product shipments. Logistic services firms are called in to do a complete supply chain audit for companies. With this a company can improve their receiving and distribution expenses and maintain or improve upon existing quality.
A supply chain audit starts by doing a freight analysis. This is done to determine where the business stands as of the moment the logistic service team walks in. Later on this will help provide a starting point to measure future results. The analysis will look into two major areas that can increase costs substantially which are the actual freight costs and fuel surcharges.
It is important that a supply chain audit is thorough. Logistic service firms will audit and evaluate shipment lanes, shipment volumes and discounts, rate and class categories, fuels surcharges and current pricing arrangements. It is important for the logistic team to get information on where the business is in comparison to industry averages to see how much room is open to negotiate better terms for their client. There are several tools that are used as benchmarks within the supply chain industry such as; air freight, small parcel, ground freight, international/global freight transportation, truckloads, ocean, rail, canal, warehousing or a combination of services.
A supply chain audit provides a logistic team with the information it needs to optimize logistic services within the company. The next step after knowing where issues exist, after negotiations and answers are given is to implement the plan and make the necessary change to the businesses logistic division to maximize mode optimization.
Implementation of the various levels of supply chain audit can be done with either help from the logistic consultants or without. That will be dependent upon each individual company. If choosing to implement the changes within the company without help from the logistic service consultants it is wise to at least allow them to reevaluate the changes a few months down the road to make sure everything is working as it should be and that all areas that needed addressing have been and are implemented as desired.