Thursday, March 15, 2012
Freight management is a current hot spot within the logistics industry. Often time businesses have a disadvantage when looking into ways to reduce freight costs. They think in the box to often looking at the obvious cost saving techniques. Individuals working within a company have a hard time separating themselves to look at what is and has always been in order to find new and unique ways to change and in turn reduce costs.
This is the exact reason supply chain, logistic consulting companies are hired. When an outside consultant is able to look at the current freight management of a company they see everything for what it is at the point of analysis. This makes it easier for them to determine areas that are proficient and those that are not. Consultants take the not so obvious and suggest putting actions into place within small parcel, ground parcel and international post freight management that will improve service, customer satisfaction and reduce freight costs.
The obvious way to decrease freight costs is by seeking a lower shipping rate with carriers. This is often an area where businesses are lead to believe they are already receiving steep discounts and the room for negotiation is zero. This however is often not the case. Many carriers will lead customers to believe that their steep discount of say 75% is the highest they give anyone. While this may be the case it is important to realize that their lowest price is not always the industry’s lowest price. Carrier A may think their 75% discount is incredible but when Carrier B is offering the same service without any discount at all at a lower price that is obviously not the best deal you can be negotiating. Negotiate with Carrier B for a discount on their already lower price is the answer to cost savings in this situation.
Important FreightManagement Money Saving Tips
1) Discounts verse Actual Rates: As proven in the above situation a discount is not always leading a client to the lowest actual rate. Even if a carrier is offering a steep discount look to see how overly inflated the original shipping rate is. It is important to determine a firm’s typical shipment fees rather than their discount. A typical fee schedule lower than other carriers discounted fees shows how jaded discounts or percentages off can really be. It is not a deal to buy a twenty-five dollar crate at a 50% discount form Carrier A when the same crate and service from Carrier B is originally only ten dollars.
2) Fuel Surcharges: This is another area in which companies often get handed extra fees. Many firms think that fuel surcharges are fixed at a certain rate. This is not something that should be assumed. Unless it is written in your agreement with a shipper the freight fuel surcharge they are charging your company could be double what could have been negotiated. This is often an area where a lot of money can be saved.
3) Behind The Scene Daily Operations: When looking at the employee expense involved with freight transportation management you will need to look at the amount of time that is spent daily receiving and reviewing shippers quotes. Even if the company is receiving a smaller number of quotes per shipment and the average shipment per week are ten that are sixty quotes that need to be looked at and evaluated.
If each quotes analysis takes ten minutes you are looking at six hundred minutes or ten hours each week that the transportation manager is tied up reviewing quotes. With the technology that logistic consultants are able to implement now-a-days that time can be decreased substantially. Web based logistic software will help decrease the time spent over the tedious tasks and increase the time spent on money making operations within the firm.
Software implementation helps in other arenas within freight transportation management such as the review and auditing of freight bills. Inaccurate billing leads to lost revenue within the freight division of a firm. It is pertinent that software be implemented to check for inaccuracies within the auditing process to save.
4) Parcel Management: When hiring a freight management consulting firm they will audit the current back end process thoroughly. They will then implement a plan that will work within the organization to minimize time spent handling damage claims, lost shipments, reconciled claims, shipment schedules and paperwork prep. Minimizing the time spent on these aspects with the use of tools and technology specifically designed for the individual operations will increase the profitability of your supply chain. They do this by decreasing human processing errors and employee time wasted finding the problems that need resolved. When the technology finds an error than it is up to the employees to seek out solutions that cannot be handled through the software.