Posted: October 29, 2019 | Newsletter
Charles Popick, Principal | Exclusive Editorial Edition
Most shippers over-pay for transportation without knowing it. They’ve been fed propaganda from their carriers that they have the best rates, or that the carrier is putting their best foot forward or they are losing money on their account. These are lies. The carrier is in the business of making money and if they are not held accountable, they will make more profit as this is their primary objective. The root cause is that the Shipper does not know what they don’t know. They don’t realize that their rates are above market rates and continue overpaying until it is pointed out to them. Being a consultant for over 25 years, I see this all the time. Below, I am going to share the fundamentals of a successful transportation program.
1) Routinely gather and analyze the data. Having a representative data sample that reflects your shipping profile is the foundation for comparing future proposals. Make sure that all of the comparisons are in an Apples-to-Apples format. This can be accomplished with a consultant’s help of creating proprietary simplified pricing formats.
2) Benchmark your current costs to market rates. Most Shippers compare their current costs to new proposals not knowing what the actual market rates are. A consultant can provide the market perspective that is lacking from a Shipper’s analysis.
3) Quantify the savings opportunity prior to going out to bid. Having clear targets prior to action enables the Shipper to sort through reasonable offers. This is accomplished through outside help and acquiring data points outside of the Shipper’s pricing history.
4) Execute the plan without bias. By leveling the playing field with the carriers and using proven negotiation methods that will ensure Carriers are placing their best foot forward. Prequalify the carriers participating in the bid to ensure that the proposals are good. A consultant can quickly determine this for the Shipper.
5) Establish a contract that locks in pricing and key service standards. Too many times Shippers acquiesce to using the Carrier’s pricing agreement which often lacks carrier accountability. A consultant possesses a treasure trove of agreements and can tailor one to meet the needs of the Shipper
Final Thoughts: Act Now for your bottom-line. If your company hasn’t reviewed its transportation program this year then NOW is the right time. If you don’t have the resources then it makes perfect sense to hire an independent consultant as a cost-effective solution. Accountability is critical, so when you hire a consultant, seek an agreement with a performance guarantee and make the consultant accountable too. CPC always adds an ALL or NOTHING performance guarantee to every engagement: If CPC fails to reach the guaranteed savings amount, then the .