Identifying and Controlling Hidden Costs

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Identifying and Controlling Hidden Costs

Identifying and Controlling Hidden Costs.

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Your organization’s transportation/distribution spend isn’t large enough perhaps the answer is leverage with other business units?

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What’s a buying/leveraging group?
A buying group is a collection of buyers that aggregate their demand into a single ‘account’ and negotiate with a commercial carrier/s or any service provider for better prices and/or improved services and more importantly a “known name” in the industry. The group of buyers should be organized around an industry sector or a common denominator.

How do buying/leveraging groups work?
A group is usually formed when an individual or business decides use bulk buying tactics for transportation services. Once a sufficient group of customers is formed, the guaranteed customer base is used to negotiate volume discounts with service providers and carriers.

What are the advantages?
Buying groups are low risk and require little or no investment and the groups don’t have to be physically co-located just share the same “common goal.”

What are the drawbacks?
Buying groups depend on a guaranteed level of spend and…

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Posted in Uncategorized | Leave a comment

Identifying and Controlling Hidden Costs

Identifying and Controlling Hidden Costs.

Posted in Uncategorized | Leave a comment

Identifying and Controlling Hidden Costs

Why are inbound shipments unique? It’s because companies don’t usually have the same kinds of controls over them as they do for their outbound shipments. In fact, many companies pay very little attention to this critical part of their business. When you leave shipping choices up to your vendors, you really have no control over the inflow of your goods and materials, which can lead to production delays, stock shortages, late deliveries, unhappy customers, and higher costs for your company.
There is no such thing as “Free Freight”! Vendors often reap extra profits for themselves by building excess freight and handling charges into their delivered, prepay-and-add, and “bundled” product prices. And, when they do negotiate reduced freight rates for themselves, they usually don’t pass the savings on to their customers. If your purchases are made on a freight prepaid or freight allowed basis, you may not be effectively leveraging your own company’s buying power to get the lowest freight rates possible.
You are the customer and you have the right to determine the freight terms and shipping arrangements that are best for you. Evaluation should be performed on your current terms and arrangements, your shipment volumes, and your alternatives to determine the purchasing terms that are best for your company. Remember…”leverage” is the key term to optimize your distribution network.

Posted in Out of the box logistics | Leave a comment

Your organization’s transportation/distribution spend isn’t large enough perhaps the answer is leverage with other business units?

Your organization’s transportation/distribution spend isn’t large enough perhaps the answer is leverage with other business units?.

Posted in Uncategorized | Leave a comment

Your organization’s transportation/distribution spend isn’t large enough perhaps the answer is leverage with other business units?

What’s a buying/leveraging group?
A buying group is a collection of buyers that aggregate their demand into a single ‘account’ and negotiate with a commercial carrier/s or any service provider for better prices and/or improved services and more importantly a “known name” in the industry. The group of buyers should be organized around an industry sector or a common denominator.

How do buying/leveraging groups work?
A group is usually formed when an individual or business decides use bulk buying tactics for transportation services. Once a sufficient group of customers is formed, the guaranteed customer base is used to negotiate volume discounts with service providers and carriers.

What are the advantages?
Buying groups are low risk and require little or no investment and the groups don’t have to be physically co-located just share the same “common goal.”

What are the drawbacks?
Buying groups depend on a guaranteed level of spend and are therefore at risk of being undermined by carriers or service providers offering the larger companies in the group separate deals (known as ‘cherry picking’) the group must also be accountable and be geared towards the 80 not the 20 and “communication” is key.

Summarize:
The buying group or leveraging group is making a commitment to each other business unit to share information and a “guaranteed” piece of the business. “Commitment” is the largest most important piece of the organization and must be maintained and monitored on a regular basis and each business unit must have a say in each and every move.
Buying groups can grow expeditiously to encompass other units….. all geared to the “common goal.”

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