Prime Advantage Blog

Controlling Inbound Freight Costs

Guest Contributor on Sep 9, 2016 1:07:35 PM

090916.jpegPrime Advantage has invited industry experts to share insights on achieving manufacturing and business success. In this post, Neal Willis of ReTrans Freight, discusses the tools and strategies you can use to minimize freight prices.

The problem with placing orders big enough to qualify for free freight is that it sometimes requires a company to carry more inventory than what is normally needed. Stocking inventory can be expensive with the carrying cost sometimes running as high as 20%-30% of the price of the product itself. Before you make a purchase just because of free freight you should examine the order minimum carefully to make sure the amount of product you’re having to buy is reasonably sellable in a timely fashion. Storage, handling, and depreciation costs can add up quickly, especially if it takes a while for you to sell the product.

Whenever free freight isn’t an option for your inbound orders, consider having your vendors send your orders freight collect. Shippers almost instinctively turn to their outbound freight when working to cut costs, but don’t forget, your inbound freight is another company’s outbound freight. Businesses have been marking up freight for a long time and it’s nearly become a standard practice. The process of managing inbound freight and supplier routings can be somewhat overwhelming. But with a little help from tools such as a vendor routing portal and/or TMS software, you can begin cutting down and possibly even eliminate unnecessary freight costs that have been historically passed on to you from your suppliers.

Rather than having vendors call you for instructions when a shipment is ready to be sent, you can automate the process by directing them to an online portal that will render shipment information to your suppliers on your behalf. You can even make certain data a required entry such as a purchase order and an email address for the vendor contact who is preparing the shipment before he or she can obtain any routing information. This allows you to capture dynamic data about inbound orders including costs and tracking information before the shipment arrives.

Controlling inbound freight costs and providing direction through vendor routing portals also allows you to automate the process of matching rate quotes with freight invoices to check for inconsistencies. Rather than sifting through pro numbers, purchase orders, and freight invoices when trying to match rate quotes to freight bills, the process can be automated to tie corresponding amounts through an associated reference number. Discrepancies in quoted versus billed amounts can be automatically detected and billing issues can be spotted long before they become major problems. 

By employing a vendor routing portal, you’ll also reduce calls and emails from suppliers regarding rate quotes and shipping instructions, which gives your staff added time to focus on your core business. Taking control of inbound freight routings can reduce and even eliminate supplier freight charge markups. Plus, the added inbound freight volume can be combined with existing outbound volume to increase purchasing power with your carriers.

ReTrans Freight is an Endorsed Supplier to buying group Prime Advantage. Prime Advantage Members save on LTL, and other freight services, because of the increased buying strength of group purchasing. 

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Topics: Manufacturing, Supplier and Member Best Practices

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