Improving your Freight Costs 2 – Required History

Phase-2: The method I am using here is to enable you to compare the potential costs of different Freight Providers if you deliver Nationally or at least over a two States. The savings or differences between Providers can be up to 53% (this is an actual figure from a project I am currently doing!).

Once you have the history file of all your consignments for the relevant period together and in a spreadsheet, you should also have all the data for each consignment on one line, with the different types of data in specific columns. You can now remove all the information (columns) that reference a customer or receiver’s name and address (referred to as “Consignee”, while you are the “Consignor”).

What should remain are the following columns:

Date, Consignment No, Destination Suburb, Destination Post Code, Actual Weight, Volume, Number of Pieces.

If you send consignments from more than one place, you will need to include the Sender’s Suburb and Post Code.

Your history file has now been de-sensitised, yet retains all the information required by your preferred/selected carriers (freight providers) to work out an appropriate quote. Now before you send this off, you need to decide what is important to you and your customers. Also be aware, you do not need to send this information to the carriers, you can always just ask for their rate-card, but this would mean you do all the work in the spreadsheet.

Phase-3 of the project is to make a list of the performance standards you will be asking your carriers to provide for comparison. You will also be asking for a copy of all their ancillary charges (these are the ones that can really hurt the pocket if you are not aware of them up front). Next time, I will give you a list of the standards I look for.

* Supply Chain Trends – just how many are there?

The Supply Chain continues to change at an ever increasing rate.  This is primarily due to the advances in technology and the availability of massive amounts of information.

To keep up with current issues and the impending changes, all those associated with the supply chain need to keep abreast of the “trends” as the saying goes, forewarned is forearmed.  But, there is a fundamental problem that any forecaster of sales, demand, usage or even the weather can tell you, it is all a calculated guess.  The ‘guesses’ get better with the more history and validated algorithms you have.

The supply chain at this level is changing so rapidly history becomes redundant and there are no algorithms.  Plus there is a plethora of opinions, some of which in reality are just a marketing tool. I wanted to see if there were overarching trends across the supply chain so did some research across a wide range of companies and organisations.

I have found there is a trend to the trends, with some particular ones floating to the top, although the individual weighting/ranking of these is hard to define. But the 15 top trends based on my research are:

  • Technology: Technology is having a major effect on the total supply chain, from cloud computing to mobile solutions and smart phones to artificial intelligence.
  • Information/Communications: The volume and types of software along with the proliferation of data has changed the way the Supply Chain is managed, even viewed.  There are better processing systems as well as automated performance reporting and even supply chain simulation software.  And because of the web, the cloud, and the number of software developers, companies of all sizes can operate with the same tools, cost is no longer the barrier it was.
  • Collaboration: This is all about collaborative relationships and closer integration between supplier-&-customer and supplier-&-supplier as well as intra-company relationships.  A common theme stated is to “build the relationship and trust between and within, companies”. This is not a “nice to have”, it is all about building strategic alliances, its importance can be shown by the number of positions now advertised with “…. Alliance Manager” within the position title (although there are a lot that are technically sales positions)
  • Outsourcing: Companies are divesting themselves of the tasks they do not excel in. We are all aware of the growth of the 3PLs over the last 20+ years but 4PLs are also now a standard business arrangement.  This trend is also obvious with call centres (on- or off-shore) as well as other back-room functions. The use of contractors is also gaining momentum.
  • Flexibility: Companies must be able to tailor their supply chains and processes to accommodate 1- increasingly demanding customer requirements 2- needs of different customer segments (or diversification of sales channels) 3- current unpredictability of the supply chain (due to market, regulatory and geographical changes/problems)
  • Sourcing: This trend had multiple options; some suggest regional and local sourcing whilst others are suggesting global sources. There is also densification of products, decentralisation of production and greater focus on Total Cost in Supplier Selection.  This area has a lot of inherent risk and all companies should be continually reviewing their sources with an eye on the risks with each.
  • Reporting and responsibility: Governments are now better able to ensure adherence to regulations and as the world grows smaller, companies must comply with an ever increasing number of regulations and requirements. Investors are also requiring better, clearer and more visibility in company reporting.
  • Environment: This is a double edged sword. There is a ground swell of customers and governments requiring companies to be more environmentally responsible.  But there is a growing need to use all available resources more effectively to contain costs for example utilising or selling waste product.
  • Strategy: Companies need to reassess their all strategies from the emergence of control towers to proliferation of product types and re-alignment of the supply chain architecture/structure. But even more critical, the Supply Chain must be acknowledged as a major strategic asset.

Once the trends are known, it is imperative companies have strategies in place to manage these trends. This will not be an easy task as each industry and each company within that industry will need to define its own appropriate strategy.

Click here,  to see a sample of the sources I used along with their own summarised list of trends. Included are Hyper-links to the relevant sites or PDFs giving a detailed perspective.