Notice we didn’t ask why, we asked when. I think we can all agree that, even though traditionally freight reviews can be difficult to conduct, eating into critical time needed to conduct day-to-day operations, we still need to take on this type of project from time to time.
Freight reviews can be initiated upon a number of flags such as:
- A contract witih your carrier(s) is about to run out.
- A carrier has not performed at the agreed level of performance as outlined in your contract with them.
- A carrier has, or is about to, increase their rates with you.
- Your business has changed: you’ve added new products with new packaging and / or materials handling requirements; new weight parrameters i.e. dead weight vs. charge weight; or new customer / receiver locations.
- You believe changes in the in the industry at large should be investigated for new opportunities for your business.
- You’re wanting to work iwth a carrier / supplier who can provide more technology smarts for you and your customers: to improve warehouse processes; automation; customer service capabilities.
Future Proofing your Freight
Long term goals need to be taken into consideration when designing the scope of a Freight Review. So, if you are making a significant change in your business, you should advise the logistics team and any consultants you work with, just as you would with say, the marketing team or consultants; in a timely manner, so that they have time to report on the impacts those changes might have on their part of the business.
This might be around new markets, omni channel, growth projections, etc. Take time to consider how this might affect your supply chain e.g., packaging, mode of transport, margins, etc.
Continuous Improvement Methodology
Nothing stays the same. Everything changes; evolves. You need to prioritise your goals, look to see what the weakest link is in your freight & logistics processes, strengthen that, measure the change, then move on to the next weakest link.
That’s why profiling your freight on a regular basis is important. As your business evolves, as outside influences change: carriers, government legislation, industry advancements, you need to assess how this affects your business and whether your current carrier distribution network is still fit for purpose.
Freight Carrier Performance
Has carrier performance dropped? Have you lost an important customer? Is the anecdotal evidence of deteriorating performance backed up by science, by the data? Our Freight Enquiry and Delivery Status solutions can provide you with supporting evidence.
If it’s not supported by the data you can allay the concerns of your customer, logistics or sales teams. If, on the other hand, the data supports any anecdotal evidence, or increased customer queries, then you have the evidence to demand action in your meetings with the carrier Account Manager or State Manager.
If you’re unsatisfied with the response or implementation of improvements; or, if they cannot accommodate your changing, growing needs you need to look elsewhere.
Freight Contracts
If you don’t have SLA ‘s (Service Level Agreements) to ensure the improvements, implementing a freight review can assist with adding those with future providers.
If you have formalised contracts to run for certain periods of time: 1 – 5 years, then it’s a pretty obvious primer for initiating a review or tender. Make sure you commence a few months before the contract ends. You can run month-to-month, but this might open up vulnerabilities to both parties. Your carrier should still provide notice of any rate increases ahead of time.
Increasing Carrier Freight Rates
A letter of intent to increase price may be another obvious prompter for a Freight review, or RFP. You will need to compare future pricing to any new pricing you receive.
Surcharges are another external prompt that may be rather informally added, e.g., Materials Handling fee due to new automating conveyor belts being added to a carrier’s DCs. This may be a sign you need to modernise to meet a new bar of capability with regard to tech or operations. It may also be a sign of a carrier pulling away for your type of freight by charging for a misalignment between your service needs and their capabilities, or direction.
Freight Cost Increase
Cost increase beyond normal parameters; that you don’t think is based upon shipping volume growth. Are there more accounting errors, hidden changes? This might lead you to initiating a Freight Audit and organising rebates on any overcharges uncovered. This may lead to renegotiation of the contract or indeed to a Freight Review.
Perhaps a decrease charge weight is leading to higher cents per kilo weight breaks, or Basic and Minimum Charges are biting harder.
Regular Business Intelligence Reports with Freight KPIs on metrics such as average charge per con note, average weight vs. dead weight etc., can help with understanding what is happening.
Freight Operations Modal Fit
Late pickups or refusing to pick up, sending the wrong kind of truck: all these kinds of issues hint to a mismatch of transport operation mode to consignment type. At the other end of the delivery cycle, damaged freight also may be a result of using the wrong carrier and / or service. Again, using Freight Business Intelligence systems should alert you to this issue before it becomes a major issue, but either way, it’s a sign you need to find a new better matched carrier via a Freight Review / RFP.
Freight Industry Changes
New players, new technological advancements, new services, legislation; all of these can have an impact on your business. How do you stay alert to the changes that may be evolving in your market? You can research, read industry related news, go to conferences but it is difficult to stay on top of all these areas and to comprehensively assess, especially if you have more immediate concerns.
Having access to expert freight consultants who manage a suite of disparate distribution organisations will assist with getting advice on these industry changes in a timely manner.
ECommerce
ECommerce has been the biggest game changer in freight for the last few years. Post COVID this trend has accelerated rapidly. This then can be a very strong catalyst for conducting a Freight Review.
Apart from building a new shopping website, new markets, eCommerce often leads to new modes of transport for businesses that have traditionally had a B2B, wholesale distribution model. Last mile requires different trucks, preferably vans in fact. For larger consignments it might entail tailgate delivery, and two people to deliver. Smarter tech is required for providing information to the consumer on price and delivery timeframe options; PDAs for real time tracking, and so on.
Some carriers just aren’t set up for all of these B2C requirements and therefore their performance will suffer and / or they will add new charges for the disruption that these freight orders will exact from them. Another sign you should perhaps initiate a Freight RFP or Tender.
Conclusion
We hope we have given you a comprehensive overview of when you should conduct a Freight Review for your business. At Freight Controller, we have the systems in place to reduce the time, effort, and cost of implementing Freight Reviews whilst providing certainty around results via predictive analytics. If you would like to learn more about how we can help with conducting a Freight Review, please contact us and we will be happy to advise you.