Freight costs represent between two and five percent of revenue in many manufacturers and distributors. They are typically the single largest supply chain expense. When transportation costs begin to escalate, the Transportation department and the Transportation leader can become the “whipping boys” for senior management.
Over the years, we have observed that the companies that are most successful in managing freight costs tend to have a collaborative work environment. They understand that successful freight cost management is most effective in companies where all of the key operating departments - - - Sales, Purchasing, Production, Warehouse and Inventory Management, Customer Service, Transportation and the Customer work together. In other words, freight management is a team sport.
When we visit a new shipper client, there are four things that we typically look for at the outset. They are a:
• 12 month Freight Budget
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