The Hidden Cash That is Tied Up In Your Vendor Shipments

Posted by George Muha on Oct 9, 2017 7:00:00 AM

Without a doubt the hottest topic I've discussed with shippers over my past 18 years in the transportation space is the lack of control people feel they have within their inbound logistics operation.  Many people seem to think they are getting scammed by costly prepaid and add programs or played a fool by vendor's "free freight" program.  And they have good reason to feel that way because it's been my experience that many times they are.  

I've spent a career unbundling inbound programs for companies and have found that this is an area that is worth diving into.  In fact, if you attack this the right way, it can produce a windfall of found money.

Since I have done this a countless amount of times, I've broken this down into five easy-to-follow posts so that anyone in your company can significantly impact this area of your business.  If you follow these five steps, no matter how big or small your company is, I'd put money that you will find a significant amount of cash available for the taking...no pun intended.  

Part 1:  Evaluate Current Vendor Freight Programs  

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There are three different ways transportation is set up from vendors; freight collect, prepaid & add and delivered price.  What I want you to do is to simply start out by listing the vendors that make the top 20% of your purchases.  Then I want you to sort them by vendors who ship freight collect to you, prepaid & add freight onto their invoices and ones who ship delivered price.  Read More

Part 2:  Create Inbound Routing Instructions

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In the second step of our five step process of taking control of inbound logistics we are going to learn out to create inbound routing instructions.  Why?  To take all the guessing work away from your vendors about your intentions of controlling inbound logistics, but of course!  Read More

Part 3:  Convert Prepay and Add to Collect 

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In the third step of our five step process of taking control of inbound logistics we are going to learn how to convert supplier prepay and add shipments to collect.  Why?  To stop allowing vendors to make big profits on freight and take better control of your own costs, but of course!  Read More

Part 4:  Unbundling Delivered Price / "Free Freight" Programs

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Now we are going to walk through the process of unbundling delivered price programs.  I know exactly what some of you are saying to yourselves right now, "Why would we touch our "free freight" programs?  I mean after all, its FREE!"  

You need to know that nothing in this world is "free" - especially when it comes to delivered price programs.  Freight is baked in the cost of the product.  Many suppliers have minimum order thresholds they want customers to buy and they entice buyers with "free freight".  Then they bury the cost of freight and product into a delivered price.  Read More

Part 5:  Collaborate With Vendors

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To achieve the pinnacle of supply chain excellence within inbound. there are several things you must have.  Some of these include analytics, key performance indicators, technology, Lean training and several other items.  But you don't need the Millennium Falcon to make some real and lasting changes.  The one thing you really need to master is the art of collaboration.  Read More

In Summary

In following these steps your company will be well on your way to adding big dollars to your company's bottom line.  Or if you prefer to have KDL help you with it, don't hesitate to reach out to us.  

Below is a case study of other ways KDL helps to remove costs from their clients logistics operation.  

Download Case Study: Cost Savings Achieved by Partnering with KDL

Topics: prepay & add, Inbound collect, Free Freight

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