19 December 2013 | Phil Machin
With more than 14 per cent of all companies around the world not knowing what they spend on logistics, how can SMEs with even more limited access to data have a chance? How does your logistics manager really know whether they have a killer deal with their logistics partner? Without sufficient reporting what leverage do logistics managers have to ensure the best price and service? In short, very little.
The truth is whether you are a blue chip multinational or SME, your third-party logistics (3PL) partner can provide all the reporting data you need. Once you have it, understand it and forecast the sales peaks, growth, profile and you will be better prepared to obtain quotes from other 3PLs, and review and negotiate your transport costs.
An understanding of what percentage of your total transport is ad hoc bespoke shipments is critical. I am sure it represents a far larger revenue share than you think, and these will be the shipments that attract the least discounts. Make sure these shipments are quoted by more than one 3PL and are factored into your negotiations.
A market review and negotiation will help keep your costs competitive, but looking at a smarter logistics solution is guaranteed to attract far greater rewards. Given how quickly logistics methods become outdated, SMEs should always ask their 3PL to visit and understand more about their business and see if there are more cost effective ways of transporting their product. Don’t be afraid to ask competitors to do the same.
Now you have an eye on the market, and they have both eyes on your business, keep your selected 3PL(s) on their toes by reviewing your transportation costs annually. The time this takes will be outweighed by the savings you achieve, guaranteed.
☛ Phil Machin is director at Bridge Procurement