Out of your hands but under control
How can I improve my freight management?
Without freight, your products would not reach your customers, but have you considered that freight is also an extension of your customer service? You may talk to your customers over the phone from time to time but the people providing your freight service will likely interact with your customers more than you do. When they meet your customers face to face what will the interaction communicate about you?
The service you provide is your product, as much as the products you sell. Your service is also an opportunity to differentiate yourself from your competitors. If you only consider freight from the perspective of a cost to be avoided or reduced you may miss this important aspect and damage your business.
If you give your customers no options for how your products are delivered and you have chosen a cheap, slow and slightly unreliable carrier, will they keep buying from you? Why not give your customers some options to pay more to get the freight service they want? Why not find a carrier and service for your product and market geography that is cheap, fast and reliable?
Here are a few tips to help you manage your freight better:
- Review the performance of your carriers monthly to check on time in full delivery performance. Track freight cost as a percentage of sales as a KPI.
- Make sure your Proof Of Delivery (POD) information is easily accessible to your customer service team. Ideally, your customers should be able to track their delivery progress and POD on line.
- Understand how the cost of your freight impacts your customer’s purchasing decisions. Could you offer premium freight options and expedited delivery services?
- Understand your own freight costs. If you are absorbing the freight cost then it will impact your bottom line. Examine how freight costs impact on the profitability of customers and groups of customers. Are you losing money on deliveries to your remote area customers? What can you do about it?
- Commit yourself to at least an annual review of the freight market to make sure you are getting the best deal both for you and your customers.
- You cannot simply compare freight rates. They are deliberately complex like mobile phone plans. You must apply any comparison rates to your own consignment history to make a fair comparison.
Investing in a Freight Management System provides such a high value return at such a low cost it really is a no-brainer!
Number 3 on our list of the top three investments you can make in your logistics operations is a multi-carrier Freight Management System (FMS). A FMS creates consignment notes, despatch labels and manifests for shipping freight and sends the data to the carrier so that they can route the freight to the correct destination and capture POD signatures and then bill you at the end of the period.
Carriers like nothing better than to lock you into their service by providing a free FMS that works only for them. If you use only one carrier this is fine but I have been in businesses with four or more different systems for creating con-notes for different carriers plus a paper pad for courier bookings. This makes the daily task of managing your freight complicated and reporting and analysis of data such a difficult task that it is usually not done.
A multi-carrier system gives you one system to learn so that your staff will be more efficient. The FMS will also centralise all your freight data to make reporting and analysis much simpler. You will be able to review all of your freight costs and analysing your cost to serve different market segments and customers will be much simpler.
The FMS should also be integrated with your WMS and/or your ERP system. This is usually such a high value add, as it eliminates manual data entry and errors, that I am constantly surprised that many businesses have not done it. I know of one company that did this at a cost of around $5000 for the development, and they eliminated the cost of one person who spent their entire day keying in con-notes (probably around $50k saving in year one, that is a 1000% return!). The returns will vary depending on your particular circumstance but you can see why this is a top three investment.
There are lots of options in this space but the ones I see most often are IFS SmartFreight, Supply Master by Compdata and Moveitnet. SmartFreight has both cloud based and server based solutions. Supply Master is server only and Moveitnet is cloud only. They are all good systems with different pricing models so you will need to work out what is most appropriate for your business.
How can we help you with your freight?
- We can help you choose and implement a Freight Management System that is integrated to your ERP or WMS so that you cut out the labour intensive consignment data entry.
- We can help you analyse your freight data and establish your Key Performance Indicators. (Yes even if the data is a mess and in five different systems.
- We can help you work out your profitability across customers and market segments.
- We can help you do a review of your current carriers and benchmark their cost and service performance against other carriers in the market so that you choose the best range of carriers for your products.
- We can run a comparison of your data across each of the carriers rates to assess the costs of each prospective carrier for your business.