Improving Your Freight Costs 3 – What do you need?

Requirements and Standards – these can be different for every shipper (you) and most of the time it will depend on what your customer wants. For example same-day, next day, normal transit, etc.

Even before getting any quotes find out what is important to you – and your customers. Make sure you understand what it is your customers really want, for this I have a great example. A client was told by many of their customers in WA, they needed to speed up their deliveries as they were always too slow. After reviewing the delivery history and talking further to customers, the issue was not the speed but the reliability as deliveries could take anywhere between 5 to 20 days for the same customer; a different problem and easier to fix.

Other requirements include:

  • Reporting – what info do you need, how often and is it ‘self-service’ or automatically sent.
  • Invoicing – what are the terms. 7 days is standard terms but ask for better.
  • Loss/Damage – what is your compensation? Here volume counts, if you have a $5M account you will be able to negotiate a better deal than zip, nothing (their reason: “We are not common carriers”). You should at least have the cost of the consignment refunded.
  • Claims – When (if) you do claim, how long will they take to research and settle. 45 days after notification is more than adequate. If it takes longer, it will get lost-in-time and the claim will quietly disappear and die.
  • Scanning – Freight providers will not generally take accountability for any consignment until it is scanned into their system. Often, this is not until it is scanned at their receiving depot. Try and get scanning at your site – as it is collected.
  • PODs – in the age of the cloud, these should be available within 2hrs of delivery and no more than 36hours for remote areas. They should also be FREE unless archived (typically after 3-6mths).
  • Action on Error – What will your freight provider do when a delivery has been lost/misplaced or will not meet its due delivery time? They should be advising you of the fact and a new ETA and before your customer rings you complaining of a no show.

Once you have what you want/expect from your freight provider, you can then maintain a focus on your requirements while assessing their quote and not be distracted by their marketing information. Next phase – getting the quotes.

Innovation – a long hard road to a better one.

It does not matter what your profession, there is always the need to keep up to date with trends, new poducts/services and the latest news.  While I was doing my own regular reseach I came across an archived article labled Supply Chain-Driven Innovation. It was very interesting reading from six years ago and the message from the author,  Kevin O’Marah,  is the still the same, basically the Supply Chain Manager must:

Use more data from more sources
Inform more people
Collaborate more
Understand other corporate functions
Expect change

The Havard Business Shool article is found at:  http://hbswk.hbs.edu/archive/5139.html

It is only now that the Supply Chain is being seen as an equal to the traditional ‘critical’  functions such as Marketing and Finance. Companies are now realising that Supply Chain is also critical and by having the collaboration of, and between the functions, then innovative ideas will happen and overall benefits will be achieved.

I suppose this was bound to happen as the issues of supply have found their way to the top of many an agenda, for example the cost of fuel (freight), the global market place (logistics), the cost of space (storage), the requirements of the customer (demand/procurement), and the impact each has on other functions of the business.

And just as the Supply Chain Manager must understand other corporate functions, the managers of other corporate functions must also understand Supply Chain. And as Marketing is far more than just showing a product to market or Finance computing an EBITDA, so Supply Chain is more than just organising the carrier for a delivery.  So it’s good to see there are companies with Supply Chain positions at C-Level.

So the question is: do you see your Supply Chain as just support for other fuctions or as a functionitself that can help build a commercial and/or competitive advantage?