Tag Archives: Distribution

Request For Proposal – Freight

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A salesman visits your company and suggests his company “On Time Trucks” is the best in the market and is going from strength to strength. It is also able to keep its rates at a very competitive level while beating all others on performance. You have all heard it before – if every transport company was this great, we would have product delivered next day anywhere in the world, for the same price it takes to deliver a letter.

Ok some are good and some will send you broke but it is up to you to decide before you take them on. Reviewing a few charge sheets and glossy brochures is NOT the way to do it.  You need an RFP (Request for Proposal or Request for Quote), basically via this document you are asking selected providers to give you a proposal in YOUR format. Why? so you can compare apples to apples – directly, without you having to manipulate or change data.

They will all promote the things they do best but what you really want is what can they do for you and at what cost. Their rates could show that although slightly expensive in one region they are super cheap in another. Do not trust this oversimplified premise.  Your best bet is to use real data (de-sensitized history) and get them to base their quote on that.  Then there are all the other benefits you will be expecting eg: compensation for damages and losses – remember they often state (in small print) that they are not “common carriers” and as such cannot be held accountable for damages or losses.  Wrong: you can ask them to advise you what regime/system they will use to compensate you, they always come up with something.

Freight is a major cost, along side storage, for any company that sells products.  Make sure you get the best provider for your type of product and delivery profile. This has the potential to reduce your total freight costs by as much as 30-40%.   Further information on how to write an RFP for freight is found on my FOCUS Expert page.

Cheers
Mark

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3PL not performing?

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Your stocks are all out of sync, you have credits mounting up in the warehouse not processed, stock is written off at every stocktake and you were told using a 3PL would make your life easier.  Now you feel you made the wrong decision!

This is a common theme I come across, companies (of all sizes) have out sourced the warehousing/distribution to 3PLs and it has all gone wrong.  The obvious target:  the 3PL (while the 3PL has another target for all their woes – you).

The usual chain of events:  the outsourcing contract is signed, the 3PL takes over and everyone is happy. The information flows back and forwards, the stock goes out but over time things start getting a  little lax or the information starts backing up and before you realise, you have customers complaining. As far as you knew there were no issues – until now,  and it’s crashing.

Working with 3PL s is not a way of removing yourself from the task.  3PLs are really a part of your business but working at arm’s length.  You need to build a rapport with them, have daily contact (not just sending them outbound orders) and weekly, if not daily, performance reports.  If you stay on top of the situation eg: number of Returns not processed, Daily Orders still to be processed, P/O Receipts to be processed, etc, you will not get any surprises.

By working together they can add value to your business, and as you get to understand 3PLs, you can make it easier for them to do theirs.  Your goal  and theirs is to achieve a win-win relationship,  the ONLY other option is a lose-lose.  They work for you, so you still need to manage them (this may even require a standalone role!).

If you are in this situation give me a call, I can either guide you through or jump in and help you through the process.