Strategies exist to acquire, ship, store, handle, and deliver supplies and products more efficiently to satisfy your bottom line.
** This article originally ran in the September issue of Food Manufacturing magazine.Freight industry analysts expect constricted transportation capacity and elevated rates to last through 2013. With this in mind, many companies are scrambling for shipping strategies to protect market position threatened by lack of access to transportation services and competitive rate structures.
For the foreseeable future, manufacturers, wholesalers and retailers will be impacted by the higher transportation costs and fewer transportation options. But strategies exist to acquire, ship, store, handle and deliver supplies and products more efficiently to satisfy your bottom line. The following transportation tips will help food manufacturers gain insights into freight strategies enjoyed by leading food companies across North America.
Communication is key. Ask your partner carriers or logistics firms how your company can work more efficiently with them. Improved communication will remove loading issues and other challenges at your facility. Companies that are easy to conduct business with are more likely to access transportation capacity and better shipping rates.
Take control. Look at your inbound freight provided by your suppliers. Ask your suppliers to pull transportation costs out of their piece price so you know what you’re paying. Often suppliers are shipping items to you on a cost-plus basis, which can equate to a significant markup on freight charges. Find out if you can get better pricing on your own.
Determine what’s possible. Significant changes have occurred in the logistics industry to help shippers with implementation of Lean, Six Sigma and other quality methodologies applied across the supply chain. Contact a few logistics firms to see what they can do to improve your transportation process. During your initial meeting, be sure to ask questions on specific strategies, insight and ideas. Listen for cost-saving ideas during the engagement.
Consider combining inbound and outbound freight. Combined inbound and outbound freight essentially creates a dedicated fleet through a third-party provider. If you are experiencing difficulty accessing transportation services at competitive rates, this approach can guarantee transportation capacity by ensuring a specific number of trucks for loading and unloading. Creating a dedicated third-party fleet typically should only be used for 50% to 70% of your freight, unless you have a very stable production and demand rate. Otherwise as your demand dips you will pay for the trucks even if standing idle. At the 50% usage rate, for example, you achieve flexibility to get freight covered in the market and assurance you can keep your fleet moving during slower periods.
Integrate. Integrate. Integrate. Focus on the entire supply chain to net bigger savings and more customer satisfaction. From the time you request something from your supplier to the time your product delivers to your customer, there are costs being placed on you and then onto your customer. Most people think of their supply chain as the physical movement of goods, but there are significant costs (and cost savings) to be achieved in the more efficient flow of information associated with movement of goods. Gaps in information flow, or handoffs from one provider to the next—from a warehouse to a trucking company, or from a vessel to customs—cost you time, money and the satisfaction of your customers.
Request food industry expertise. The food industry requires deep understanding and expertise in transportation to ensure your company benefits from knowing all the rules and little nuances of shipping food. Ask for in-depth illustrations of work done for companies similar to yours. It will pay off in securing transportation options that not only meet your demands but the demands of others who influence all aspects of the food industry.
Explore other areas. Beyond shipping and receiving, logistics firms should be well-versed and committed to working with accounting, production, customer service and numerous other areas within your company. This approach ensures efficiencies are realized across departments. Ask how frequently meetings are held with these areas. If it is less than monthly, opportunities are likely being missed by your current provider.
Obtain damage claims. Damaged goods should be at a minimum when dealing with a reputable freight service provider. But when issues arise, you should expect your provider to go to bat for you with the carrier. Before signing with any third-party logistics provider, ensure you review their claims process. How successful are they at creating an acceptable resolution should issues arise? If a situation requires reimbursement, how long before you are reimbursed?
Benchmark other providers. Determine how well your current logistics provider does when compared to the rest of the industry. How do they stack up in terms of generating efficiencies within the supply chain, flexibility in responding to short-lead customer requests, and demonstrating significant negotiating power to produce cost savings? Have they proven to be capable of competitive rates and responsiveness to needs and changing business models? If you don’t know, you will be surprised what you find if you take the time to issue a request for proposal to see how they are doing.
Don Cox is CEO of Evans Transportation Services. As a logistics services company, Evans provides world-class freight solutions for leading food companies across North America. To receive a case study with specific results achieved for one of Evans’ food industry clients, contact him at [email protected].