Kim Lorimer, Vice President, was a featured Thought Leader in the September issue of Inbound Logistics. Read what she had to say about Training and Mentoring.
Kim Lorimer, Vice President, was a featured Thought Leader in the September issue of Inbound Logistics. Read what she had to say about Training and Mentoring.
Read Chris’ Thought Leader Article interview on the subject of using in-truck technology to cut costs. He was featured in Inbound Logistics, an online and printed industry magazine.
Nick’s article appears online here: http://independentretailer.com/2012/11/05/how-to-eliminate-concealed-transportation-expenses/
For independent retailers trying to contain costs, inbound transportation is an area ripe with cost savings potential. These costs can comprise as much as 35 percent of a company’s total logistics expenses. The challenge in addressing these costs is that the majority of inbound transportation is prepaid or “delivered,” that is, the transportation is arranged and paid for by the vendor. When shipping choices, including setting rates, choosing carriers and assigning classification codes, are left to the vendor, retailers have little control over the inflow and transportation charges related to their goods. This can lead to stock shortages and late deliveries. It can also result in higher costs due to the markup for vendor prepaid transportation. This markup can be as high as 40 percent, as vendors build excess transportation and handling charges into their prices and often don’t pass on negotiated reduced transportation rates to their customers. Larger independent retailers that eliminate these hidden expenses and enact other cost-saving measures can save hundreds of thousands of dollars or more per year. Even smaller retailers can achieve significant savings.
To that end, here are seven steps retailers can take to reduce inbound transportation costs:
One way to leverage your transportation volume is to combine the buying power of several companies. Many retailers benefit from consortium transportation rates, and some of the most cost-effective consortia are among companies in a single industry, such as retailing. Single-industry-specific consortia can be more effective than other multi-company arrangements because the pricing is geared toward a single industry’s commodities; routing guides are easier to enforce because more companies are shipping from common vendors; and core carriers are more productive and competitively priced when more freight pickups occur at common vendors. Additionally, carriers’ pricing tends to be more aggressive when bidding for multiple accounts. One way to engage in consortium rates is through an independent third party that can gather the data, negotiate pricing with a limited number of carriers and supply the software to track shipments. A third-party alliance can increase your buying power without the need to share information with competitors.
Proactively managing your inbound transportation can help you reduce costs and improve your supply chain. The keys are to take control of carrier selection and classification decisions, track all inbound transportation dollars expended and reduce the number of delivering carriers. The resulting savings will make the effort well worthwhile.