If modern day supply chain owners are asked to identify the most challenging factors in cost reduction in their business, they will unequivocally point to the difficulty of finding competitive freight rates. As the online purchase trend has become the in thing and is expanding at a phenomenal rate, cost-effective, and reliable shipping solutions become intrinsic to the online sales process.
Aspects To Consider
Market research brings forth some interesting facts about buyers’ expectations and behaviour.
- 77% of consumers prefer free shipping to fast shipping
- 81% of consumers wanted tracking on their package after making an online purchase.
- 49% of buyers just abandoned their purchase looking at the high shipping costs.
It has become imperative for supply chain owners to find a solution to this critical issue of reducing shipping charges that they tend to pass on to buyers. The matter ultimately boils down to supply chain and logistics management as a crucial aspect of a business strategy.
Ways To Plan Logistics And Supply Chain Management
In any business strategy, planning is the starting point. It is a daunting process that demands both time and knowledge and involves:
- Gathering relevant data about your products.
- Projecting sales forecast as accurately as possible based on various scenarios affecting the market for your products.
- Examining monthly operational expenses, which include shipping costs.
- Keeping an eye on and evaluating the performance of your trade and logistics partners.
- Assessing trends in consumers’ buying behaviour.
Carrying out this exercise at regular intervals provides you ballpark figures of the volume of cargo you ship directly to store. These estimates form the basis for using the following tips to lower your freight costs effectively:
- Research all the relevant information, such as cargo rates, volumes, competitive market rates, etc. to negotiate from a position of advantage and also select the most beneficial proposal.
- Encourage suppliers to use your shipping account number as this will add to your volume. Once you identify and select suppliers for your shipping, keep nudging them to use your shipping number. This is one of the most commonly ignored methods of reducing shipping costs, but it is very effective. Your ability to get better rates depends on your business’ shipping volume.
Some Other Things To Focus On
#1 Negotiate With Many Carriers
Businesses with higher shipping volume regularly attract lower rates. Once you have this ace in your hand, you can also take advantage of the fact that ‘Customers are always right.’ Everyone has the power to negotiate but larger your business, greater is your power to negotiate. Learn the art of negotiation and use it to your advantage by comparing various rates and haggling with freight forwarders to provide you the lowest possible rate.
#2 Find About Remote Shipping Lanes
It is essential to check out which remote shipping lanes offer lower rates. It is normal for freight forwarders to negotiate rates of the popular shipping lanes. But if you have checked the availability of any remote shipping lanes with lower rates, you can opt for them to ship your goods.
#3 The Connect Between Cost Per Mile Of Freight Rates And Fuel Surcharge
Fuel surcharge fluctuates and is an integral part of the cost per mile. Ensure that the freight forwarder does not overcharge you by adding the fuel charge even when prices have dropped. Learn how the cost per mile is calculated and negotiate for a better rate.
For effective and sustainable cost reduction strategies & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 02 9525 0777. If you prefer, write to us at this email address, and we will revert quickly.
Thanks for reading,
Benchmark Cost Solutions Team
02 9525 0777