Identifying and Controlling Hidden Costs

Why are inbound shipments unique? It’s because companies don’t usually have the same kinds of controls over them as they do for their outbound shipments. In fact, many companies pay very little attention to this critical part of their business. When you leave shipping choices up to your vendors, you really have no control over the inflow of your goods and materials, which can lead to production delays, stock shortages, late deliveries, unhappy customers, and higher costs for your company.

There is no such thing as “Free Freight”! Vendors often reap extra profits for themselves by building excess freight and handling charges into their delivered, prepay-and-add, and “bundled” product prices. And, when they do negotiate reduced freight rates for themselves, they usually don’t pass the savings on to their customers. If your purchases are made on a freight collect basis, you may not be effectively leveraging your own company’s buying power to get the lowest freight rates possible.

You are the customer and you have the right to determine the freight terms and shipping arrangements that are best for you.  Evaluation should be performed on your current terms and arrangements, your shipment volumes, and your alternatives to determine the purchasing terms that are best for your company.  Remember…”leverage” is the key term to optimize your distribution network.

One Response to Identifying and Controlling Hidden Costs

  1. David- Spot on! Getting visibility into inbound freight is a huge area of cost savings opportunity. Give me a call to to further discuss this. At Spend Radar, we have the ability to pull in Freight Bills as part of Spend Analysis, and we are looking to work with an organization who also sees this area as untapped savings. Call me, (847) 867-8707.
    Thanks- Rod True, COO, Spend Radar.

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