Direct-to-consumer retailers spend an average of 2% – 4% of gross sales on vendor inbound freight ranking it among the top eight operational expenses. While often overlooked, supply chain management impacts:
- gross margin
- purchasing staff productivity
- inventory control
- receiving efficiency and
- fulfillment operations
Applying industry best practices can help supply chain managers improve company bottom lines and take charge of inbound vendor freight. If your company is responsible for freight, require vendors to ship collect or third party with your carriers. A well designed vendor routing guide is an important tool to manage inbound freight.
Vendors will always want to use their carrier and add freight to their invoice. We call this “prepay & add.” It’s good for the vendor improving their efficiency and their bottom line. Some companies even generate profits from outbound freight. However, it’s costly for most companies receiving freight.
Don’t let your vendors bundle freight into the cost of goods. Free freight is not always free, it’s just hidden in product costs. Ask your buyers to unbundle freight if possible and do the math. Is it really less?
Are your current LTL carriers are giving you the best deal possible? An experienced transportation consultant can help you test the waters with a competitive bid process. Make sure you do your homework; leverage volume with a few good service carriers; and, negotiate cost not discounts. You may benefit from a Buying Consortium that leverages multi-company volume to obtain economies of scale.
Kline Global (KG) provides consulting services for: domestic LTL & truckload freight; and international Air, Ocean, Warehousing & Customs. We use industry best practices to monitor and route vendor inbound freight. We make sure vendors use the lowest cost carrier and provide reliable pickup and delivery. Kline Global can help you take charge of your vendor inbound freight and optimize your supply chain saving 10-30%. To get started contact Jeff Kline.