WAYS TO SAVE ON: CARRIAGE & LOGISTICS. Gillian Gibbon. The Overhead Expert OF POUNDS THOUSANDS A SINGLE PENNY WITHOUT SPENDING SAVE YOUR COMPANY

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1 11 WAYS TO SAVE ON: CARRIAGE & LOGISTICS HOW TO SAVE YOUR COMPANY THOUSANDS OF POUNDS WITHOUT SPENDING A SINGLE PENNY Gillian Gibbon The Overhead Expert

It s my business to save your business money and help you to grow Having spent many years in the corporate world, my greatest satisfaction now is seeing how I can help organisations to become leaner,

2 It s my business to save your business money and help you to grow Having spent many years in the corporate world, my greatest satisfaction now is seeing how I can help organisations to become leaner, more flexible and release hidden cash/profits that can be reinvested or used to gain competitive advantage. Since 2003, I started my own Cost Management Consultancy with the UK s No1 in this sector. My favourite question to clients is to ask them regularly what they have done with the expenditure released back to them from the projects we work on and manage. I have helped a wide range of clients including charities, housing groups, manufacturers, schools, retailers and commercial organisations. Each client is different and with my project teams I deliver expertise, time and resource the client may not have in house. We undertake a huge range of client cost management projects and here I am focusing on an area of essential and increasing cost for many industries that of carriage & logistics. Recently I calculated how much money I ve saved my clients over the past 13 years. I was pleasantly surprised to find it amounted to well over 24,000,000. I have put together MY TOP 11 CARRIAGE & LOGISTICS STRATEGIES for you to benefit from and immediately implement in your business Ways To Save On: Carriage & Logistics Gillian Gibbon

3 1. Have a continuity plan Carriage and logistics will form a major element of your supply chain; in fact without these services your business could grind to a halt. We recommend that all of our clients implement a continuity plan and have secondary suppliers in place that could be implemented immediately if required. It was astonishing to witness the number of businesses that ground to a halt following the demise of Citylink in January Be cautious using third parties Are you dealing directly with the under-writing carrier? Or are you using a third party? Sometimes it is appropriate to use third parties, but these companies will apply an extra layer of margin. The question your business should ask is whether you need to be using a third party or not (in 95% of cases the answer will be no). In the event that you do need to use a third party, then you should evaluate whether the extra layer of margin is fair and ethical against the services benefits you receive as a result. 3. Make your packaging as lean as possible Many carriers, certainly in the courier industry, will charge you based upon volumetric weight of the parcel as opposed to the pure weight. So, always make sure that your packaging is as lean as possible in providing the necessary protection and security of the products. Try to avoid large boxes that are unnecessarily stuffed with high volumes of packing materials Ways To Save On: Carriage & Logistics Gillian Gibbon

4 4. Avoid oversized items One of the most common and expensive charges that we come across on a couriers invoice will be oversized items. Most carriers will apply extremely high handling charges for any item that is more than 1.2 metres in length, and regardless of the weight. There are very few carriers that will not penalise you for this ugly traffic. Is there any way you can adjust the product profile to reduce the carriage costs? If it is a high volume product that is the issue, then you could always seek to use a specialist carrier. 5. Ensure you benefit from available services and technology Are you getting the most from your carrier from a service and technology perspective? In the couriers markets it is becoming industry norm now to have a text or notification service that informs the recipient when their parcel will arrive, and allows them to rearrange it if necessary. These extra services are free of charge and can boost your customer service levels quite considerably and lower your staff requirements to deal with undelivered items. 6. Review your carriage policy Do you recover your carriage charges from your customers? Or are they a cost to the business? Pending your answer to this question then it could be worth implementing a carriage policy that will limit the effect on your profit and loss account. For example, could you use a budget carrier or a 48 hour service as default, and charge a premium for next day? 4 11 Ways To Save On: Carriage & Logistics Gillian Gibbon

5 7. Keep reviewing the market and keep your options open Whether you are using couriers, freight, or freight forwarding services, there will rarely (if ever) be a contract in place. This means that you are free to assess the markets or move to a different carrier at any point in time. 8. Ensure you review when there are changes in your business Pricing for couriers and freight services will be based upon the carriage profile at your business. Therefore, it can be lucrative to reassess your pricing when any major changes take place in your business, from a volume or product perspective. For example, keep an eye on: The average weight per consignment The dimensions of your consignments The volume of parcels per data Different carriers specialise in different profiles. For example, UPS are a shoe box carrier and they price on a volumetric basis. If your products become larger and bulkier, even if you have the best rate possible from UPS, there will still be more cost effective carriers that will be better suited to your profile. 9. Keep an eye on market changes Freight forwarding is often priced on the spot markets, and unless you spend many hundreds of thousands of pounds per annum, then you are likely to be using a third party to organise the logistics. We would recommend that you assess whether your third party is passing on any pricing benefits that occur through positive changes in the markets. From an ethical perspective, we often try to work with third parties on an open book basis so that we can see how much profit they are making from our clients Ways To Save On: Carriage & Logistics Gillian Gibbon

6 10. Track your key performance indicators Do you track your carriage KPI s? And more importantly do you compare these KPI s against the industry? Price isn t everything, and often service can be more important. Tracking your KPI s can be a great marketing point; it can also help you to improve your carriage services, and even help you to make claims to your carriers for any lost products or business. KPI information is easy to get hold of, and your carrier will provide this to you on request in the event that you do not have the resources to monitor it internally. 11. Review your pallet service If you are using a palletised service, and maybe one that feeds into a national franchised pallet network, then there could be some cost savings attainable by a full audit. Pallets will be charged on a 1/4, 1/2 or full basis and the criteria for each will vary based upon the network. Your business needs to ensure that it is using the best network for its profile based on sizing and weight, and the nature of products being transported. Don t be afraid of moving pallet services if necessary; even if your local franchisee provides a great service, the reality is that neither you nor they have any control over your consignment once it has left your local region. For example, a pallet going from Yorkshire to Sussex could change hands over six times over the course of this journey. Franchisees are changing all the time, as indeed are the KPI s within each network Ways To Save On: Carriage & Logistics Gillian Gibbon

Summary Carriage is often one of the largest costs for retail, distribution and manufacturing businesses.

Companies cannot rely on the carriers to advise them as their objectives are biased.

Auditel understands the integrals of all carriers and logistics networks, of all the services that are available, and all of the KPI s that your company should be achieving.

All of our processes are built around the principle of surveying the market place and preparing a business case for opportunities.

Clients I work with include: Savings of 160k and 32% per annum on couriers, freight and freight forwarding for a 45m t/o manufacturing business in the South East.

7 Summary Carriage is often one of the largest costs for retail, distribution and manufacturing businesses. It is also one of the most difficult cost categories to understand and evaluate, as the pricing structures that are applied by carriers are often complex and very difficult to understand. Companies cannot rely on the carriers to advise them as their objectives are biased. It is critical that the company has a complete and accurate view of the industry, services and costs from a completely independent stand point. Auditel understands the integrals of all carriers and logistics networks, of all the services that are available, and all of the KPI s that your company should be achieving. Our motivation is to ensure that our clients carriage costs are as efficient as possible and that they are using services which will ensure optimum customer service and experience. All of our processes are built around the principle of surveying the market place and preparing a business case for opportunities. Your project will be completely bespoke and we will be working to the objectives and strategy of your company. Clients I work with include: Savings of 160k and 32% per annum on couriers, freight and freight forwarding for a 45m t/o manufacturing business in the South East. In all instances we moved to new carriers that were more appropriate to the client s needs. Savings of 100k and 15% on palletised freight for a 20m t/o distribution business in the Midlands. Achieved with the incumbent carrier via a quarterly rebate payment. Savings of 90k and 27% on couriers for a 12m t/o distribution business in the Midlands. Achieved by migrating to a more appropriate carrier for the client s profile. Savings of 40k and 7% on international postage for a 3m t/o web based retailer based in London. Achieved by switching to a downstream postal provider with no negative effects on service levels and KPI s. Here s how I can help your business, now! If you would like to take a look at where your organisation may be needlessly wasting cash on Carriage & Logistics, contact me by phone or below for a 20 minute complimentary telephone Review of your Carriage & Logistics. There is no obligation to go any further and if I don t think any improvements can be made, I will tell you honestly. Call me on Or me at gillian.gibbon@auditel.co.uk 7 11 Ways To Save On: Carriage & Logistics Gillian Gibbon all rights reserved

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