Should You Hire KDL for Freight Management or Do It Yourself?

Posted by George Muha on Feb 13, 2017 10:56:25 AM

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When considering partnering with KDL to assist them with the management of their logistics operation, most companies face two questions.  Do they hire KDL or do they do it themselves.  Coming up with the answer to this question is easier than they think.

Evaluating these scenarios requires companies to look their current state and if they have the pieces to sustain their way to the scale where their company wants to go.  Honestly assessing whether their personnel has the right skill set, their systems are equipped with the correct technologies, they have the ability to collaborate internally and externally and have the business intelligence to drive change is something that a company has to vet out.  With that in mind, here are some things to take into consideration while making this assessment.

Does Your Personnel Have the Right Skill Set?

Shipping a product from Point A to Point B sounds so simple and, in theory, doesn't require a Masters in Quantum Theory.  But companies with any kind of freight spend know that there is a lot more that goes into properly managing the logistics part of the business than just pressing a button.  

Take varying shipping modes as an example.  Small parcel shipping is different than shipping less-than-truckload type shipments.  Shipping truckload or partial load quantities has its own nuances.  And shipping internationally is another animal all together!  

As an example, small parcel rates are focused on the management of revenue bands pre-negotiated with the parcel companies.  However, some heavy parcel shipments might make more sense to go via less-than-truckload carrier.  But if an LTL shipment takes too much space in a truck, a carrier will charge you a cubic capacity penalty where it might have made so much more sense to ship it via a partial truckload shipment.  However, if it is produce season, then the forumla changes all together.  

Mistakes are costly in logistics because of the redundant nature of them.   A $30.00 error can turn into a $30,000.00 rabbit hole if it scales across 1,000 shipments.  That is why logistics executives can command a premium salary.

Are The Proper Technologies in Place?

If your company is doing any kind of regular shipping you are well aware that the act of a truck picking up a shipment and delivering it is just a small portion of what's involved.  As an example, before a shipment even happens there is a lot of activity going on like getting quotes, filling out bill of ladings, scheduling pickups, printing labels, etc.  Once a shipment is in transit, there are even more tasks like tracking and scheduling the delivery, and all of the emails and phone calls involved in that.  

Then, after a shipment is delivered, an invoice is issued.  That invoice needs to be properly audited and matched to confirm the rate is correct, entered into the accounting system, coded with the accurate general ledger codes and paid to the freight carrier.  Multiply all of this activity times however many shipments are made in a given week and things add up quickly.

Without the right transportation management system (TMS) and supporting technology tools, shippers can pay hefty salaries to do mind numbing data entry and overly manual duties. These are tasks that can and should be automated.  But knowing what systems to implement is a must.

Are You Able to Collaborate Internally and Externally Effectively?

Internal Collaboration:  Often times company departments can get stuck in silos, forgetting that they are all on the same team.  This plays into having the skill set to see how logistics touches many departments of a company and the proper techologies to streamline processes across all parts of the business.

As example, a shipping clerk may purchase a technology that makes it easier to fill out a bill of lading.  However, another offering might bring visibility to shipment tracking for customer service, automated freight bill audit and processing for accounting, quoting tools for sales and business intelligence for management.  Because KDL does this for a living, we ensure all departments are given the appropriate tools so they can use their abilities to impact their core business and not have their energy sucked up by menial tasks.

External Collaboration:  When a company is to able partner with their customers in strategic ways an amazing bond gets formed way beyond price and payment terms.  As an example, we have a customer who was shipping multiple less-than-truckload loads to their customer each week.  When we brought the visibility of cost savings and efficiencies gained by shipping a truckload once a week, they approached their customer to see if they could work together to make it better for both sides.

After the meeting took place, our client found that the customer was also spending a ton of time stripping the corrugated boxes down and repackaging the product in their own boxes.  They came up with an ingenius plan that would benefit both companies even more.  Since they will be sending one full truck once a week, they could now seal the trailer which allowed them not have to package the product - saving loads of time and money for both parties.

Collaborating with suppliers and customers makes doing business fun and puts muscle into business relationships.  These are the building blocks that can help take a business to new levels of profitabilty and sustainability.  

Does Your Company have the Visibility to Drive Operational Change?

We get nervous for a company when they tell us they make a certain business decision based on a "gut feeling".  As an example, we had a prospective client's shipping department tell us they liked a particular freight carrier the most.  When we put a score card system in place, that carrier scored dead last in service and billing mistakes.  However, the sales person bought lunch for the shipping department once a week which apparently gave a much different perceived impression versus what the reality was.

We are all human and can get swayed by feelings.  Business relations are important as I mentioned in my collaboration section.  But when the numbers identify something harmful to the business, they cannot be ignored.  

It's our experience that freight analytics are highly under reported, despite being such a big cost center for a lot of companies.  Executives are typically surprised when they see how varied their cost per pound can be depending on geography.  This is especially powerful for companies who have equalized "delivered" or "free" freight programs.  Having the right analytics in place, as another example, can help to raise and lower thresholds where freight concessions are made. 

Almost everyone can agree that having a sustainable business that maintains strong profits cannot depend on "gut feelings" as it's foundation.  It's business intelligence and analytics that provides the measurements where the health of the company can be bench-marked and built upon. 

Summary

KDL makes the decision easy to partner with by performing an upfront analysis to identify the hard and soft savings opportunity and taking the time to really understand their clients business well and by providing some simple efficiency tools for those who want to crawl before they walk.  However, companies still need to be honest with themselves about their own strengths and weaknesses

Shippers can certainly make the investments in time, technology and people to manage this business area themselves.  Similarly as it is when employing the help from a company like ADP to assist with their payroll and human resources.  Those are functions that can be organically mastered.  But that takes time and money, either of which a company might not have or want to give up...especially when KDL can fast track them immediately while putting the cost savings dollars back into their pockets in Day 1.  

Download Case Study: Cost Savings Achieved by Partnering with KDL

If you liked this article you might like the following as well:

Finding Hidden Money In Inbound Logistics (5 Part Series)

10 Freight Trends Your Company Can't Ignore

10 Compelling Reasons to Outsource Logistics

 

Topics: freight savings, KDL Logisitcs, the best 3rd part logistics company

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