Transportation and eFreight Audit

 

The largest component of supply chain costs is transportation. For many enterprises, transportation costs are equal to 4% to 5% of revenue.

 

There are numerous avenues for balancing the transportation needs of the enterprise with the needs of carriers, suppliers and customers.

Rates – rate negotiations can be difficult. However, there are negotiation methodologies that can result in a win-win for the enterprise and carriers.
 

• Operations Interface – carriers, shippers and consignees interact on a daily basis. Frequently, these interactions can be enhanced to improve service and lower operating costs for all participants.
   

• Service – high service is always an objective for the enterprise and carriers. Fast transit times and service reliability can drive down inventories and generate customer satisfaction. But, premium service levels can carry premium prices. The key is to match service needs with the most cost effective carrier alternative.  

 

• Audits – low rates and demanding service level agreements are a good first step in lowering overall supply chain costs. To ensure the enterprise is reaping the benefits of these tools, follow up is needed to ensure preferred carriers are being used where appropriate and rates are being applied correctly.
   

• Expediting – the costs to expedite shipments once there has been a failure in supply chain execution can be breath taking. These cost can be avoided by building more reliability into supply chains and, when a failure does occur, identify it early in the process when the costs to fix are minimal.
   

• Mode Selection – today, it is not important that freight moves by truck, air, ocean or rail. It is important that transit times and service reliability meet shipper needs. Processes that match the appropriate mode with service needs result in efficient transportation operations.
   

• Consolidation – high asset utilization, that is full trucks, aircraft, ships and rail cars yield lower operating costs. Consolidation and flow-through facilities can result in improved utilization as well as other benefits if implemented in the right locations and tasked with the right mission.