Reduce freight rates and save money - Part 2
at Thursday, January 29, 2009
We pick up with part 2 of our series on how to reduce freight rates and save money. In our conclusion, we discuss the next 5 key tips on how to save money on transportation costs.
1. Make sure your trucks ship fully loaded. You would be surprised to learn, according to the DOT, fully loaded trucks rarely happen. There are systems that help you achieve that goal. One such system is AutoVLB from Transportation | Warehouse Optimization. In fact, Procter & Gamble, a client of Transportation | Warehouse Optimization since the early 90's, claim they realized a 7% savings by using this system.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Optimize modes. Conventional tractor-trailer shipments or even inter-modal 53 ft containers are not always the most economical way to ship. Steamship lines are often desperate to get their 40 ft containers back to port. While the load size is diminished, the savings can more than make up for that apparent inefficiency. Shipping even a few containers will reduce freight rates and increase cost savings.
4. Audit activities and renegotiate freight rates when there is an opportunity and lock the rates in for multiple years. Check on your freight payments and evaluate your competitiveness by going to the market often. But, when you think you have a good thing, lock the rates in with some form of indexing over the next few years.
5. Create the right mix of private fleet, dedicated trucks, dedicated capacity and spot-market purchases. The right mix can provide the right level of shipment security and be very good supply chain management. Use private fleet for high-service customer deliveries where back hauls are available or the length of haul is short. Dedicated trucks can be more cost effective - but you need to keep them moving too. Dedicated capacity is just that - some guarantee of the number of trucks that the carrier guarantees to provide on any day.
The best way to reduce freight rates is to cut waste and work with the right partner.
Transportation | Warehouse Optimization (TWO) had worked with the best of the best. Procter & Gamble, and other Fortune 50 companies are among their client list - P & G is a long-term client since 1992. TWO has saved P & G millions of dollars with transportation consulting solutions. Taking a long-term view, they understand the industry, the market place, and like good consultants do, keep the client as the top priority. Contact them at www.TransportationOptimization.com for your free consultation today. Also TEST YOUR SKILLS and see how well you manage your costs. Load a truck and see how efficient you are.
1. Make sure your trucks ship fully loaded. You would be surprised to learn, according to the DOT, fully loaded trucks rarely happen. There are systems that help you achieve that goal. One such system is AutoVLB from Transportation | Warehouse Optimization. In fact, Procter & Gamble, a client of Transportation | Warehouse Optimization since the early 90's, claim they realized a 7% savings by using this system.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Optimize modes. Conventional tractor-trailer shipments or even inter-modal 53 ft containers are not always the most economical way to ship. Steamship lines are often desperate to get their 40 ft containers back to port. While the load size is diminished, the savings can more than make up for that apparent inefficiency. Shipping even a few containers will reduce freight rates and increase cost savings.
4. Audit activities and renegotiate freight rates when there is an opportunity and lock the rates in for multiple years. Check on your freight payments and evaluate your competitiveness by going to the market often. But, when you think you have a good thing, lock the rates in with some form of indexing over the next few years.
5. Create the right mix of private fleet, dedicated trucks, dedicated capacity and spot-market purchases. The right mix can provide the right level of shipment security and be very good supply chain management. Use private fleet for high-service customer deliveries where back hauls are available or the length of haul is short. Dedicated trucks can be more cost effective - but you need to keep them moving too. Dedicated capacity is just that - some guarantee of the number of trucks that the carrier guarantees to provide on any day.
The best way to reduce freight rates is to cut waste and work with the right partner.
Transportation | Warehouse Optimization (TWO) had worked with the best of the best. Procter & Gamble, and other Fortune 50 companies are among their client list - P & G is a long-term client since 1992. TWO has saved P & G millions of dollars with transportation consulting solutions. Taking a long-term view, they understand the industry, the market place, and like good consultants do, keep the client as the top priority. Contact them at www.TransportationOptimization.com for your free consultation today. Also TEST YOUR SKILLS and see how well you manage your costs. Load a truck and see how efficient you are.
About the Author:
Tom Moore and his associates at Transportation l Warehouse Optimization will help you reduce freight rates and save you money. Transportation l Warehouse Optimization works with companies such as P&G and BP and many other Fortune 500 companies. They can help you reduce freight rates and save money.
