twelve for the road

Nov 01, 2004 10:30 PM  By

No matter which carrier you use, there are ways to radically cut your shipping costs, according to Mark Taylor, CEO of Plymouth, MI-based Taylor Systems Engineering Corp. and a leading authority on logistics and warehouse productivity. He suggests implementing the 12-point plan outlined below.

  1. Consolidate shipments. Always try to combine shipments, whether it means putting several orders in the same box, banding boxes together, or using a full truck. You can save 15%-20% in shipping charges.

  2. Shop your dates. Find out the date your customer wants the package delivered. There’s no need to pay for expedited delivery if regular service gets it there at the same time. Make sure to compare all service levels and transit times. Taylor cites the example of a 40-lb. package going from Holland, MI, to Plymouth, MI: Second-day air shipment costs $40, but ground service costs just $10 and takes only one day.

  3. Compare and use multiple carriers. For a residential delivery to Zone 8, a USPS Priority Mail package weighing up to two pounds costs $3.85; by contrast, UPS charges $5.33 for a 1 lb. parcel and $6.02 for a 2 lb. package, rates that are higher by 38% and 56%, respectively.

  4. Negotiate for better rates. Don’t assume that the prices you’re given are carved in stone. Astute negotiation can yield substantial discounts for both ground and air shipments.

  5. Do not over-serve your customers’ expectations. Provide service that is better than what they expect, but not so much better that it becomes expensive and problematic for you to keep up.

  6. Control your express shipping costs. This is directly related to Item 5 above — is it really necessary to use next-day air? Restrict the number of people who can send express packages.

  7. Understand the carriers’ language. When they say they’ll get it there by 10:30 a.m., verify that it applies to your destination zip code, cautions Taylor. Compare carriers’ promises with actual service levels to the zip codes to which you’re shipping.

  8. Charge your customers for shipping and handling. If your goal is to run a cost-effective shipping operation, it doesn’t make sense to pass on your hard-won carrier discounts to your customers.

  9. Never pay for shipping and handling. Create vendor routing guides, and make sure that carrier discounts apply to your inbound shipments as well as drop shipments from vendors to your customers.

  10. Watch the “accessorials.” These are charges that carriers tack on for address corrections (average of $5 each), missing or incorrect account numbers, and other errors that can easily be prevented.

  11. Audit your carrier invoices. Inspect them carefully for billing accuracy. Monitor on-time delivery, either by doing it yourself online or using a service to check actual delivery times.

  12. eliminate errors. Taylor warns that a shipping error can cost upward of $200 to rectify. He advises using up-to-date technology to verify that boxes contain the right items in the right quantity and are properly labeled.