Purchasing managers are faced with the increasingly difficult task of finding transport providers who can offer sustainable savings within the supply chain. But can you be sure that the company you choose really can provide the benefits that they claim?
The conventional purchasing approach is to undertake a simple price-focused tender. But looking at price alone does nothing to guarantee a better service.
The average profit margin of the top 100 hauliers is less than 4 per cent, offering little room for negotiation. In fact, the ability to provide a lower rate is based on the amount of empty running a haulier factors in to meet your transport needs. So, unless you have the flexibility to allow your requirements to work around the transport provider, the price savings that come about through this approach need to be taken with a large pinch of salt.
Deciphering the various tariff and service options from transport companies can also be a challenge, with different fuel surcharges, order cut-offs, interpretation of service requirements.
As a customer, you only want to pay for loaded vehicles, but with such
tight margins, a haulier can only offer lower rates by minimising their empty running. This isn’t easy, necessitating finding an exact fit of business that matches your variable transport requirements.
Savings can be achieved by using multiple carriers and allowing them the flexibility to provide rates for work when it suits them. But this creates a complex operation, complicated by comparing tariffs, availability and activity with different contractors – often daily.
☛ Tim Fawkes is managing director of transport management advisers 3t Logistics