Becoming an Indispensable Logistics Manager
Supply chain costs are a leading business expense, and these days CFOs are taking a closer look to get this spending under control. The logistics manager who communicates effectively with corporate management and deftly manages freight costs will be a valuable employee. George Muha, regional sales manager for Mass.-based Logistics Management Inc., offers his advice for becoming an indispensable logistics manager.
1. Offer the sales department your insight. Sales reps sometimes waive freight charges to incentivize a customer, without knowing the profit loss this causes. A logistics manager should supply all the relevant numbers to help establish profitable free freight deals.
2. Get involved with price increases.Companies often raise the prices of their products without considering freight as a factor. Logistics managers can help the company drive sales by presenting less costly shipping regions, weight breaks, and minimum orders to different parts of the country.
3. Initiate quarterly meetings with company executives. They may not be familiar with the intricacies of transportation, but corporate managers do know it costs a lot of money. Let them know you're on top of where the money goes. Show how you are keeping cost per pound low, and how current figures compare to previous ones.
4. Caution against inbound prepay-and-add programs. Purchasing managers should have access to your freight rates so they can quickly calculate the difference between a vendor's prepay-and-add program and the cost of shipping collect.
5. Help purchasing managers pick vendors in affordable shipping locations. Use purchasing managers' skill at saving money to your advantage by pricing products from their vendors. If their potential vendors sell a similar product from two different parts of the country, show them the difference in pricing from a transportation standpoint.
6. Create a vendor letter. Draw up a letter for purchasing to forward to their vendors providing details on how you want to ship, your parcel account number, and your preferred carriers. The vendor letter also acts as an insurance policy if your vendor mistakenly ships by a carrier not on your routing guide. Having a signed letter allows you to charge vendors back for their mistake.
7. Draw up a receiving policy.Create a simple freight receiving checklist for dock workers. Explain how to inspect a shipment and note any exceptions or damages on the bills of lading. Help workers understand their rights when receiving shipments so they are not intimidated by hurried drivers.
8. Get digital.An inexpensive digital camera can be a powerful savings tool on the receiving and shipping dock. Have workers snap a picture of every order as it goes on or comes off the truck. Download and store the photos at the end of each day, and you'll be covered if damage claims arise.
9. Create profit centers.Saving money is great, but creating a new revenue stream is even better. For example, create an outbound prepay-and-add program. Be sure it is competitive enough to be attractive to your customers while earning a profit healthy enough to make your company's executives happy.
10. Be open to using 3PLs. Many 3PLs aggregate volume to secure aggressive freight rates, help administer invoices, and offer reporting tools that can help logistics managers present valuable cost-savings data to their companies.