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Consolidate Shipping for Strategic AdvantageShipping product is one of those "nuts and bolts" of operating a business that most companies don’t often focus on as long as it seems to be running smoothly. Customers conventionally pay freight charges, so suppliers build their operations around the expectations that customers will include their shipping account information on the purchase order. Those shipping charges will automatically be added to the total product cost when it is time to send the invoice. That all sounds good on paper but the reality can look something more like this.
These are examples of the sort of events that people just take for granted as being part of the complexity of logistics. However, it is estimated that about 5% of shipping costs are due to avoidable errors. This is 5% that would go straight to the bottom line. That is not even including any wasted time fixing the problems. There is a better way. Ideally you could convert all of your shipping activities to a uniform and consistent process that is completely under your control. If you did, your error rate would plummet to nearly zero. Here’s how this can be done.
This is a greatly simplified version of the process and of course shipping is not free to you. But you might be surprised at how competitive carriers can become if they have a chance to win an exclusive contract with a local supplier. Get quotes and run the numbers and keep in mind that on top of negotiated savings, additional savings come from a reduction in errors. You may find that you need to phase in some incremental price hikes on some items to cover your costs, but it can be done. What you will gain is that virtually every customer that is used to paying for freight will gladly say yes when offered free freight for a 2nd day shipment (or whatever equivalent you can negotiate). You also gain a huge strategic advantage over your competitors as "free freight" is still not a standard in the manufacturing industries. Simplifying this one step helps gain market share, and the added profits ultimately cover the freight costs. Of course every business change requires an adjustment to your technology suite. For our example lets say a hypothetical ABC Shipping Co. is your chosen vendor. You may need to install or re-code a barcode system. You will likely have to install a new label printer, and update Order, Invoice, and Bill of Lading documents to conform with their standards. Tracking numbers need to appear in your database in their standard format. Country of origin needs to appear for international shipments, etc. Below is a list of some of the most common causes of shipment delays so you will want to make sure that your new system avoids these common errors.
If you can see your way clear to standardizing all of your shipments through a single carrier you will immediately see the benefit of lowered shipment costs, less time chasing down missed shipments, having a top-rated on-time delivery system (giving you preferred supplier status) and taking a strategic jump over your competitors. Read other technology articles |