Whether you are a large company or a small one, if you use freight carriers you need to be reviewing the price you are charged and the service you receive on a regular basis. Best case scenario: this would be happening with all your suppliers.
Carriers, as with most suppliers, will over time become complacent, the service you are receiving slowly gets behind the rest of the market and your costs as a percentage of sales are not as good as they once were.
A review of your suppliers and a comparison with the market will tell you how much more you could be saving; then again it could also show you how much you are already saving (although this happens a lot less).
In my blog, I will explain the steps you too can follow to improve your costs and service.
This process can be informal by just requesting a quote or formal, using a detailed RFP process. Either way it is about stopping the leakage, it is also about improving the relationship you have with your service providers. So until next time, start reviewing what information and history you have now or where you can get it from.
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.