managing inbound freight costs loette d. king, cpsm, cpsd
TRANSCRIPT
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Managing Inbound Freight Costs
Loette D. King, CPSM, CPSD
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Topics
• Why Consider Inbound Freight?• Preparation• The Outsource or In-House Decision• Choosing a Partner• Case Study – Emory University
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Why Consider Inbound Freight?
• Too often, Inbound Freight Costs are not controlled• Some suppliers utilize freight as a revenue center• Some suppliers pass along the actual cost – but is the
cost high or low?• One of the most overlooked areas for significant cost
reductions• Any savings in inbound freight costs provides
additional funds for research or operations
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Preparation
• Review existing charges• Evaluate your potential opportunity• Determine which suppliers are best suited for the
program • Federal Grant Concerns• Departmental Concerns• Accounting Systems
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The Outsource or In-House Decision
• Inbound Freight Management can require intensive administration, including – supplier setup and follow-up
– ensuring correct billing
– customer communication
• In-House freight management eliminates Provider fees, but requires significant internal resources
• Outsourcing removes the operational burden of program management
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Choosing a Partner
• Determine your Expectations– System integrations (e-Procurement and ERP)– Assistance with communication– Interaction with the suppliers during enablement– Follow through with unmatched charges– Available reporting– Due diligence– Your level of control during implementation
• Check with your Preferred Carriers
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Case Study – Emory University
• Implementing a freight management program needed to be simple and require a small investment of our time.
• We also had the following special requirements in order for us to commit to a specific Provider:– Process must work with our e-Procurement and financial
platforms – Billing must be linked back to the accounting provided on the
PO– Data must be provided in a manner which allows our
customers to easily track their shipping costs– Reporting which allows for monitoring of the program as well
as internal analysis
Finding A Program To Meet Our Needs
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• Rollout began in Fall 2012.
• The first phase included 12 suppliers and lasted 4 months.
• Our Provider contacted the suppliers with the pre-approved communication tools
• Customer communication
• Monitoring of savings
Case Study – Emory UniversityImplementation Process
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• Our provider supplied recommended drafts of supplier and customer communication, which were tailored to meet our needs.
• Customer communication was further customized to include information on how customers could view their shipping charges for each PO.
• Communication was posted on our website and presented to various campus groups.
Case Study – Emory UniversityCommunication
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• Following the initial success of the first phase of implementation, we expanded to include to suppliers with preexisting agreements with our provider.
• One year into the program, Emory had enabled 230 suppliers, capturing over $260k in savings .
• On March 7th, we began enabling our entire supplier base into the program.
Case Study – Emory UniversityCautiously Widening Our Scope
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Case Study – Emory UniversityThe Trends
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Case Study – Emory UniversityThe Numbers
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• In March 2014, we began enabling our entire supplier base into the program.
• We needed to make some changes in our processes– Send a list of all of our suppliers to our provider
– Send data related to every PO and invoice to our provider
– Update shipping instructions associated with all of our POs
Case Study – Emory UniversityMoving Forward Into Full Implementation
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If non-negotiated freight charges apply, ship via FedEx and bill third party to FedEx Account # XXXXXXX and insert PO# in Recipient 2nd Address field. For free freight and LTL shipments, please use your preferred carrier.
Case Study – Emory UniversityPO Shipping Instructions
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Case Study – Emory UniversityThe Results
• Significant savings for the university– Emory has maintained a conservative estimate of $22
savings per PO. – The most conservative overall savings exceeds $260k for a
very small portion of our supplier base.
• No negative feedback from customers
• Strong Strategic Partnership with our Provider and our Shipper
• Considering expanding to LTL shipments