As we continue with part two of our series on how to reduce freight rates and save money on transportation, shipping truckload freight, we look at the remaining 5 tips that can put money in your pocket.
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. Simplifying assumptions often lead to unnecessary or wasteful moves, and that can cost money. You can overcome this with enhancements to the order management system that dynamically defines ship point for any order based on cost and fill rates. This is an enhancement because most order management systems use a deterministic approach: if, for example, you are a customer in Indiana, you will always be shipped from Chicago. You don't want to ship loads unnecessarily. Here is how it works. In a deterministic order system, a customer in Indianapolis would receive a load from its supply point in Chicago regardless if the entire product was made and in stock in Nashville. Eliminating the unnecessary shipments to Chicago and then back to Indianapolis saves transportation costs.
3. Make sure you utilize the right shipping mode. The traditional method of using a tractor-trailer may not be the least expensive mode of shipment. When there is a high incidence of empty 40 ft containers, Steamship lines are very eager to get their containers back to port. Even though the load size may be diminished, the cost savings from loading these boxes can be great because of shipping deals that can be made.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
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.
As you look at truckload freight rates, keep in mind that to truly cut costs, you need to eliminate waste and work with the right partners.
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. - 15431
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. Simplifying assumptions often lead to unnecessary or wasteful moves, and that can cost money. You can overcome this with enhancements to the order management system that dynamically defines ship point for any order based on cost and fill rates. This is an enhancement because most order management systems use a deterministic approach: if, for example, you are a customer in Indiana, you will always be shipped from Chicago. You don't want to ship loads unnecessarily. Here is how it works. In a deterministic order system, a customer in Indianapolis would receive a load from its supply point in Chicago regardless if the entire product was made and in stock in Nashville. Eliminating the unnecessary shipments to Chicago and then back to Indianapolis saves transportation costs.
3. Make sure you utilize the right shipping mode. The traditional method of using a tractor-trailer may not be the least expensive mode of shipment. When there is a high incidence of empty 40 ft containers, Steamship lines are very eager to get their containers back to port. Even though the load size may be diminished, the cost savings from loading these boxes can be great because of shipping deals that can be made.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
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.
As you look at truckload freight rates, keep in mind that to truly cut costs, you need to eliminate waste and work with the right partners.
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. - 15431
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 consults with companies such as P&G and BP and many other CPG companies. They can help you reduce freight rates and save money.
