Production Machining

JUN 2018

Production Machining - Your access to the precision machining industrial buyer.

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productionmachining.com :: 17 Helping Precision Machine Shops Be More ProducƟ ve and Profi table 4 Steps to Gain Control of Inbound Shipping The following article is presented by PartnerShip. PartnerShip has decades of experience managing LTL freight, small-package and truckload shipping for thousands of businesses. PartnerShip is one of the many free PMPA member benefi ts and helps members save on every inbound, outbound, small and large shipment through its PMPA Shipping Program. Reducing inbound shipping costs is one of the easiest, yet most overlooked ways to reduce overall transportation expenses. Like many small businesses, you may not currently have control over the shipments coming into your business. It is not uncommon for small businesses to let the vendor shipping the product to you arrange the carrier, select the mode of transportation and manage the actual pickup and delivery times. In some cases, the convenience of this arrangement may work well for your situation. However, that convenience comes with a cost: you may fi nd that you are paying signifi cantly more for inbound shipping than if you had arranged for it on your own. Here are four steps you can follow to better understand your true inbound shipping costs and the cost savings opportunities you may be missing. 1. Find a 3PL Partner For many small businesses, there are distinct advantages of working with a 3PL partner. If you're looking to gain control of your inbound shipping, make sure you fi nd a partner that has demonstrated experience and established tools for helping businesses manage their inbound. Additionally, most 3PL freight partners are able to aggregate the freight volume of many small-to-medium sized businesses and help them negotiate better discount rates and terms. They can also provide additional value-added services, sometimes at no additional cost, that are designed to lower your overall logistics expenses. 2. Analyze Your Inbound In order to understand your true, inbound shipping costs, you fi rst must complete a thorough shipping analysis by reviewing recent purchase invoices from your key suppliers. Most businesses may be surprised to fi nd that vendors often add 2 to 10 percent to the value of their purchased merchandise. When reviewing your purchase invoices, here are some terms you should keep in mind: • Free Freight: There really is no such thing as free freight. Look closely as your vendor has probably buried their shipping costs into the purchase price of your goods. • Prepaid and Add: This means your vendor is paying the freight for your shipment. It also means they are controlling the routing and adding this expense – often with additional "handling fees" to the cost of your merchandise. 3. Negotiate Better Rates When you work with an established 3PL freight partner (either directly or through an industry or association shipping program), you will generally be able to secure your business the best possible inbound shipping rates. An experienced 3PL partner will be able to aggregate your needs with the needs of hundreds or thousands of small businesses like yours in order to secure the most competitive deals. Be careful of "fl y-by-night" freight brokers or 3PLs that work with thousands of carriers. Often, the quality of the service you get from, say, "Bob's Trucking," will be comparable to the cheap prices you pay. So be sure you engage with a 3PL that only works with the most reputable carriers in the industry, such as UPS Freight, YRC Freight, Con-way Freight and FedEx. 4. Create Inbound Routing Instructions With your 3PL partner relationship, your analysis of purchase invoices completed and your competitive inbound shipping rates in hand, you're now ready for the fi nal step of creating inbound Continues on page 18

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