Managing Freight Costs – Business Acumen 101
For several days we have been looking for ways to cut costs. These methods can be used internally by managers looking to improve their productivity or unit performance. Externally, B2B sales people can look for ways their products or services can produce these advantages for their customers. The key is to review the lists and find one that makes sense for you. Then take that one method – launch and measure your results.
Today we look at managing or controlling the costs associated with freight expenses. This is a major line item for many companies and therefore we have an opportunity to manage or control these costs. So we will look at ten ways to reduce or manage your freight expenses:
- Centralize negotiations for freight haulage.
- Reduce insurance costs.
- Reduce handling costs.
- Reformulate product or packaging to lighten shipping weights.
- Relocate warehouses.
- Utilize trucks more efficiently, or buy trucks instead of renting/leasing.
- Reduce intraplant inventory transfers.
- Stage incoming shipments to reduce overtime.
- Prescribe preferring routing.
- Better planning to reduce special or rush order shipments.
There you have the top ten methods to reduce or manage freight expenses for your customers or your company. Your goal is to pick the one that makes sense for your situation. One successful change in this area can lead to major cost savings for the company or customer. If you are dealing with a customer, this saving could have a serious impact on your ROI. So, again measure your results so you can show VALUE.
Freight is also one of the major negotiation points between sales people and purchasing agents. There are numerous options for freight expenses – just remember that the critical issue is actually having the inventory on hand when it is needed. Downtime due to lack of inventory on hand is a major cost to every manufacturing plant. Matching the inventory needs is still the important thing – listen to what is needed, what is important and the desired results. Then deliver the right combination.
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