freight cost reduction

Freight cost reduction A Six Sigma Project OF

By: Somesvar Veeramani WHITE PAPER EXECUTIVE SUMMARY

As a business executive of a manufacturing, distribution, or any company who ships freight, you are often wondering ways on how to reduce freight costs. As your CFO or Financial Controller may tell you, and your business experience, when it comes to freight costs, it's not only the hard cost of shipping the freight, or the freight rate, but it's the whole picture you must take a look at. Meaning, what are both the hard AND soft cost savings that you can realize when you are better armed with the following top 6 of 11 considerations when processing freight shipments. After extensive freight rate negotiations, we renegotiated the carrier contracts and achieved a savings for the client. We also established standard operating procedures with the carriers to assure that the client’s service quality requirements were fully understood and that the carriers would meet them. These procedures included steps for the carriers to take to initiate remedial action in the event pending service failures were identified in order to maintain high service quality. Total freight savings exceeded $ 646,758 per year for the period project was done. Project Summary

Freight spent on Imports Cargo is increasing amidst of overall increase in Fuel charges, Freight Charges and Service Charges. It is very challenging to restrict and control the freight spent against the Revenue and Receipts Project Metrics

Control the per Kgs average spend and bring down Cost from US$ 2.9 to US$ 2.0 and Maintain the per Kg average spend on Sea mode. Problem Statement Freight spent on Imports Cargo is increasing amidst of overall increase in Fuel charges, Freight Charges and Service Charges. It is very challenging to restrict and control the freight spent against the Revenue and Receipts.

Project Goal (Team Charter)

To reduce and control the inbound freight ratio and average spent from 2.9 to 2.0 US$/Kg.

Acknowledgements

This project was the result of the joint efforts put up by the team comprising the following: Neelavannan Natarajan - Logistics Ramesh Kumar Sampath - Logistics Balaji Ganesan - Logistics Puvannan Nandakumar - Purchase Ganesh Ramaiah - Purchase Radha Rajendran - Logistics

We acknowledge them individually for their contribution in making this project a great success.