Managing Freight Costs in a Turbulent Market - What's Your Plan?
Nov 4, 2020
Make no mistake about it, shippers are living within conditions that are raising their freight costs and causing disruptions in their supply chain.
That's why I was not too surprised when I received a call from a friend of mine a few weeks ago and he said, “Mike, I love these Two Minute Warnings, but may I make a suggestion? Since my company is experiencing the kind of challenges you’re talking about in these recent 'Code Red Warnings', how about a couple of 'Two Minute Solutions' about what we can do to get our arms around our spiraling freight costs?”
After we both laughed, I asked him the same question I have asked many shippers: "Does your company have a written plan that details how your company manages transportation? And have you done any kind of scenario planning to address what could happen if there were sudden changes?”
When he responded "No" to both questions, I assured him he's not alone. Based on experience, fewer than 10% of the companies we ask that question to actually have a written transportation spend management plan or something similar. And that is why without a plan, companies often act in a reactive—versus proactive mode—when things like today's "Code Red" conditions hit the freight markets.
Interestingly, you would think that companies that are spending hundreds of thousands, or hundreds of millions of dollars would want to invest the time in creating a written plan that addresses the practices and processes that drive their freight costs. They might also want to consider some scenario planning exercises to mitigate uncertainty.
That’s why we created our eBook about How to Create a Transportation Spend Management Plan and continue to get great feedback. It explores how internal decisions from procurement, sales and other areas of the company impact how your company consumes freight and influences costs.
If you want more solutions for things you can do to be proactive about managing your costs, save your seat for the webinar we’re hosting with CSCMP and NASSTRAC on November 17 at 11am CST called Code Red Solutions for Shippers.