The executive mandate for nearly every company manufacturing a pharmaceutical, cell phone, or techno-widget is always to 'cut costs and save money' ;.Supply chain and transportation costs tend to be overlooked, egregiously trusting their freight rates are competitive and their contracts optimized. Unfortunately this is often not the case. The wise operations officer will hire a specialist that specializes in carrier freight-rate optimization to streamline contracts and save the company millions of dollars over the life of a carrier agreement.
Supply Chain Reality
The rigors of managing a transportation and supply chain operation are demanding. It is fluid and changing Source. One reason is product sourcing which regularly adjusts, changes, and pivots between suppliers. Distribution points and hubs can shift. New routing guides and policies could be implemented. Consolidation and merging operations can further complicate any logistics operation. These changes can greatly influence transportation costs and the agreements that manage them. The balancing of many of these factors will often inadvertently create an environment where freight rates and contracts go unchecked leading to higher then needed expenses for the company.
The Solution-Freight Contract Optimization
Chief Operation Officers, Senior Vice Presidents of Supply Chains, and Vice Presidents of Distribution and Logistics are now actually researching and hiring independent transportation specialists. These experts will optimize freight rates, minimize accessorial charges, and simply tariffs. The answers are significant. Freight carriers have traditionally realized fatter profits as a result of passive oversight of carrier agreements. Companies are now actually saving 15% or even more in transportation costs by tweaking and modifying rates to mirror their firm's real shipping trends and activity. Company executives recognize that carriers consider the carrier's best interests. As it pertains to freight contracts, carriers have professional negotiators that discuss pricing on a daily basis with lots of different companies and know how to price and operate profitably. Wise company executives understand that regardless of his / her expertise in transportation, they'll square-off with a individual that automatically has a bonus over their company when they don't seek the proper professional to aid in the negotiation process. They recognize and actively seek to level the playing field by hiring a specialist to assist their transportation group develop a win-win that both carrier and company can work with.
Freight rate optimization can produce significant results for any organization shipping packages via small parcel, LTL, or even truckload. The proper professionals specializing in carrier contract optimization could have a background working previously for starters or a number of the major small package and freight carriers. Further, the most effective freight rate specialists could have a working familiarity with the policies, procedures, and systems that govern carrier pricing. These seasoned professionals will partner with a business to save them hundreds of 1000s of dollars annually and, perhaps millions on the course of the freight agreement.
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