How to Reduce Transportation Costs

02/15/2011

How to Reduce Transportation Costs

Manufacturing and logistics go hand in hand. To make a profit, manufacturers need to get their customers the right product, at the right time, and at the right cost. It’s easy to see then why the number one challenge for manufacturers is working to reduce transportation costs. Are you taking the right steps to do so?

Steps to Reduce Transportation Costs

 

Eliminate your manual processes.

Chances are, you’ve been doing things the same way for so long, you don’t even recognize there’s a better way to do them. We’ve all been there and change can be hard, but noticing you have room for improvement is the first step towards growth.

Imagine what your current day looks like. At the end of it, do you feel as if you’ve accomplished what you’d set out to do that morning, or did you get sidetracked along the way? Take, for example, when a salesperson asks you to track down their shipment. You may spend hours on the phone tracking it down, only to step into your next “to do” item, getting a rate for a special order. After looking through about 7 different carrier’s rate spreadsheets, you discover it’s a new lane and you begin calling or emailing to get the rate. Look down at the clock, my friend, and the day is over. What have you accomplished towards your core goals and larger projects? Could there have been a way to have automate all of those manual tasks?

Now is the time to rely on technology, such as a Transportation Management System (TMS) that provides real-time visibility and with only a few clicks of the mouse. Better yet, share access across the company to empower your sales team with the information they need at a moment’s notice.

 

Analyze your orders for possible consolidation.

Are you making the most of every truck moving your freight? Your shipment planning team should be able to analyze current orders and forecast future ones so as to build their shipments in the most cost-effective manner possible. Are you shipping more than a few pallets, ending up in a larger LTL move? Why not encourage the customer to purchase more product to fill the trailer or solicit other business to turn that LTL move into a truckload shipment?

Outsourcing your logistics to a third-party logistics company (3PL) means you get to work with experts in routing and planning your shipments. Trinity Logistics provides the option for our customers to utilize an optimization service, where we can load shipments into a TMS to map out the possibilities and tell you within seconds what your savings could be. Find out more, here. 

 

Gain control of your vendor-routed or customer-routed shipments.

Depending on the customer, sometimes you have your hands tied when it comes to logistics. You may be required using their specific providers as a condition of doing business with them. However, there are instances where you may be able to gain control of these opportunities for savings. Don’t fall into the trap of agreeing to a price for your raw materials or inbound product that includes transportation. How can you be sure of the service quality of their chosen provider? Don’t you wonder about the potential for savings if you controlled this section of your business? By leveraging your volume, ALL of it, you could qualify for some really decent savings with Less-than-truckload (LTL) and Truckload providers. Additionally, you’ll gain control of your shipments, which equals control of the quality of the provider, saving you money by retaining happy returning customers. When the ball is in your court, you can measure service performance and rates to ensure your best interests are being cared for.

 

Increase visibility of your freight.

Without this, the “extra” costs begin to sneak in like stealth monsters to eat away at your bottom line. They slip in undetected because on the front side, you agreed to a set price with the provider. On the backside, however, without the proper visibility of your supply chain, your company incurs expenses from an inability to plan ahead. Knowing your freight’s location enables you to prepare effectively to reduce the “extra” costs. True visibility is more than having a cell phone to call the driver, it’s using a best-in-class TMS that enables you to see tracking updates on all of your freight at once. 

 

Outsource your logistics.

Unless you are a non-profit organization, your goal as a company is to turn a profit. In the most basic sense, this comes from selling as much product as possible at the highest profit margin possible. Any activity that isn’t directly tied to either securing more business deflects attention away from that goal. That means the hours you spend sourcing transportation providers are not considered a profitable way to spend your time. By partnering with a 3PL, like Trinity Logistics, you are FREE to do what you do best–SELL! 

 

Working with a 3PL and utilizing their transportation management system will reduce transportation costs by better managing your supply chain and logistics. According to Steve Syfan, outsourcing your logistics to a 3PL can reduce transportation costs by at least 5% and up to 25%. By utilizing a 3PL, you won’t have to worry about any of the steps above because they will take care of them for you. 

 

See how you can reduce your transportation costs today.
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Updated September 2, 2020 by Christine Griffith.