Simple changes to your freight logistics could deliver double-digit savings, if you know where to look.
For many Australian businesses, efficient movement of goods from the warehouse to outlets or customers is central to the company’s ability to compete in domestic and international markets. However, both businesses large and small make supply chain and freight mistakes that cut into the bottom line – sometimes costing them double what they should be paying.
“We have never walked into a business that isn’t making at least two of the most common freight errors,” says Robert Comelli FCPA, CEO of Triangle Logistics Management (TLM).
Here are five common freight errors that could be costing your business money.
Error 1: Using the carrier’s cubic profile.
A cubic conversion factor identifies whether your freight is heavy or light. Carriers install their own set cubic rate factors (typically 250m³ or 333m³ in road freight), but what if your cubic profile is different?
“If you are able to calculate the cubic profile to a true cubic factor, you are in a position to negotiate a reduction of the carrier’s allowance, resulting in an overall cost reduction,” says Comelli.
In a real-life example, TLM calculated that a client’s freight had a true cubic profile of 125m³ and negotiated this with various carriers. The business saw the freight costs drop dramatically.
Error 2: Incorrect packaging sizes.
People often simply grab the first box they see, regardless of how appropriate it is to pack an item. It’s an easy mistake to make, and a costly one.
Comelli says a TLM client sent a large number of items via standard 5kg, 3kg, and 1kg airfreight, using standard carton sizes. By reducing one carton by just 1cm³ it moved the company’s main product line to a lower weight bracket, delivering big savings.
Saving: 33 per cent for that product.
Error 3: Not consolidating orders.
Customers expect to be able to buy products 24 hours a day, seven days a week, online and in store. As a result, many businesses order through the warehouse more than once a day for a particular destination, but may not group the orders together into one delivery. This means they are charged extra for each consignment.
For example, if you send three separate consignments of 6kg (A$11.80), 7kg (A$12.10) and 8kg (A$12.40) to the same place on the same day, you would pay A$36.30. If these deliveries are consolidated, you would pay only A$16.30, Comelli says.
Potential saving: 55 per cent.
Error 4: Using the wrong service type.
Many businesses incur additional costs when they send large items with parcel carriers that operate on high cents-per-kilo rates. Others lose money sending small items via bulk carriers that have high minimum charges per item.
Potential saving: 7-10 per cent.
Error 5: Not integrating logistics with ERP.
You can eliminate or automate time-consuming dispatch activities such as invoice printing, packaging and chasing ETAs by integrating logistics with ERP systems.
“Our SAVIY software and fully outsourced customer service solution provides clients with comprehensive end-to-end freight management and logistics solutions, utilising a national one multi-carrier system and offering live real-time freight visibility from point of origin through to a final destination,” Comelli says.
His observations echo findings of the PwC 2017 Commercial Transportation Trends report, which predicts that advanced telematics will enable transportation companies to have real-time information about truck location, the health and fatigue of the driver, and more.
Potential saving: 11 per cent of annual spend on transport logistics.
Find out more
TLM offers a free review of your business’s transport logistics requirements. Call 1300 937 772 or visit www.trianglelogistics.com.au