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How Can Thinking Like A Big Shipper Save Money? (Part 2)

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Freights being transported

Shippers need to do the best they can to move away from using carrier websites. Carrier websites are designed to fit shippers into the box for which that carrier wants you to be in. Small to mid-sized shippers can’t usually afford robust transportation management system (TMS) and so they just rely on the carrier website in order to rate shipments, create bills, schedule pickups, track their shipments and pull down invoices.

Should shippers use carrier websites to plan and execute shipments?

Shippers need to do the best they can to move away from using carrier websites. Carrier websites are designed to fit shippers into the box for which that carrier wants you to be in. Small to mid-sized shippers can’t usually afford robust transportation management system (TMS) and so they just rely on the carrier website in order to rate shipments, create bills, schedule pickups, track their shipments and pull down invoices. Of course we don’t tell a small shipper to implement a transportation management system. What we work with them to do is find maybe a 3PL company or maybe a consulting firm or maybe a smaller software company in order to onboard a transportation management system or maybe a lite TMS. This way they can put all their carriers on one system and don’t have to go to multiple sites and spend a lot of time on the website and go to one system for all their rating, contracting, billing, tracking and invoices.

What kind of organizational changes can shippers make to reduce costs?

When we look at a small to mid-sized shipper, most of the meat on the bone is with transportation pricing and moving freight differently, but there are ways an organization can save headcount from restructuring their organization. We don’t typically have folks reduce headcount, we typically have them focus on how they can use their resources differently.

We look at whether they have a centralized transportation model or a de-centralized transportation model. You might be able to do all your planning centrally and do your dispatch de-centrally. Where we see folks run into trouble is when they try to do planning and execution in dispatching at the local level and that pulls – let’s say warehouse folks – off the warehouse floor and in front of the computer, in a carrier system or on a transportation management system. We like to see those folks spending more time in the warehouse picking, packing and building pallets and less time doing some of the rate shopping and carrier selection and have that function moved to a centralized location. When you move it to a centralized location – a center of excellence or just a transportation department – you can find ways to move freight differently across your network. For example, if you have DC that is are geographically close, or you have vendors near some of your DCs, you can, from a centralized location, have a control tower perspective on your network from an inbound or outbound or drop ship perspective. We really just look at what should be centralized and what should be de-centralized and determine if there are ways to better deploy your resources.

When does it make sense to bring in third party expertise to help manage contracts? What are the benefits?

All the time and any time. There are ways you can look at third parties – such as consultants, logistics service providers, carriers and software companies – for assistance. All these folks will come in and help you whether it’s part of their sales cycle to try to win the business or whether it’s just ongoing improvement opportunities that will maybe save you money and save them money through operational efficiencies.

We’ve talked to some clients before that aren’t happy with their customs broker, for example. They think they could save some money through lower document costs, maybe through classifying their goods with different codes. They’ve brought in a potential service provider to replace the incumbent and those folks will do an analysis of their international shipments to see if there’s a way for them to save money. So, you can bring in third parties all the time, and it doesn’t mean you’re a bad person if you flirt with your service provider’s vendor.

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