How to Save Money on Your Inbound-Freight Program
5. Negotiate lower freight rates. Leverage your volume to get better freight discounts on LTL. Negotiate with your carrier to get reduced minimums, eliminate extra charges and get flat C.O.D. charges.
6. Create visibility. In-transit freight tracking will reduce the time buyers spend confirming shipments with vendors. It also helps to monitor individual carrier performance. So look for carriers who can supply such tracking methods.
7. Develop and enforce a vendor-routing guide. Routing guides help you control costs and improve receiving efficiency. The guide itself should be simple and on one page. It should include proper routing instructions telling your vendors exactly which carriers to use by transportation mode and in priority order. Use the guide to enforce vendor compliance. Clearly state the rewards for strict adherence and the consequences, such as chargebacks, for those who neglect your routing instructions. Your routing guide will be distributed to vendors' shipping departments. And single-carrier choices will be entered into your vendors' order-processing systems. Your routing guide should be included with the purchase order as a separate item.
Consolidate Shipments
After you've negotiated new rates and implemented your inbound freight-management program and routing guides, the next area of cost savings to explore is consolidated shipments. To do that, monitor and review all freight shipments to the same customer base to see if they can be efficiently combined. We've found that in many cases, merchants see more than 10 percent savings from having fewer shipments. They often can turn LTL shipments into truckloads along with and using the right carriers at the right prices. Use exception reports, management reports created to track missed pickups and consolidation opportunities, to help drive good practices and discipline across your vendor base.
Some catalogers may have sufficient leverage to implement many of the above-noted initiatives. In those cases it makes sense to band with other companies to pool your resources and buying power. Some direct marketers are benefiting from consortium shipping rates. The best way to do this is through an independent third party that can gather the data, negotiate single-rate base contracts with a limited number of carriers, and supply the software to track shipments. A third-party alliance can increase your buying power without you having to share information with competitors.
