4 Common Fees to Monitor for Supply Chain Savings

Tags: Logistics, Supply Chain

As logistic departments focus more time and energy on meeting fast order fulfillment, it can become inherently difficult to save money without changing the mix of services used to less premium ones. More often than not, managers are squeezing their network like a tube of toothpaste: getting every last drop out. Take advantage of the low hanging fruit in your network with four simple, yet powerful key performance indicators that focus on maintaining a healthy network by reducing unnecessary and often avoidable fees.

1. Address Corrections. Address corrections are obtained when a package has a mistake with its recipient address. These fees can be applied for errors like spelling a city name incorrectly or using the wrong postal code. It may seem trivial on paper, but with charges around $13.00 to $14.00 per package, these can add up fast. To help battle these fees, it is important to go back to the data and establish what addresses are incurring fees most often. After establishing a list of repeat-offending addresses, an attempt can then be made to check for any patterns where the fees are originating.

2. Invalid Accounts. If a package does not provide a valid sender account number, carriers can tack on an extra $13.00 to $14.00 per shipment. These errors can often be fixed at the origin of the package by ensuring the correct sender account number is used. Analyzing the data can show what locations may be the largest offenders in order to implement a plan to help reduce occurrences.

3. Dimensional Weight Fees. It seems obvious that shipping a pack of pens in a large box the size of a refrigerator would be overkill. The perception between box size and the dimensional weight are often prone to error. For example, a box with dimensions 1 ft. x 1 ft. x 1 ft. may have a dimensional weight of 13 pounds depending on the carrier and their dimensional weight factor. In this scenario, if the items contained in the box weighed only two pounds, the box will still be billed for 13 pounds. Dimensional weights are important to track and analyze on a regular basis.

4. Package Consolidation. Suppose a customer orders a baseball helmet and a baseball glove. The fulfillment center may decide to put the helmet and glove in different boxes. Soon after, the customer forgot to order baseballs and places another order. They pack the baseballs separately into a third box. Although an extreme case, a single box would likely have been sufficient. One would like to believe their management system is doing this already and doing it right, but it is still important to proactively check that all systems are functioning as originally intended. Depending on how well package consolidation is being done, a large savings opportunity may await.

Networks need to be watched and monitored regularly to prevent issues from creeping up. There are a number of a business intelligence platforms available to help with proactive monitoring and analytical processes. Our human intuition and awareness can sometimes make it hard to see what the numbers are actually telling us. With an open mind, there are many other opportunities awaiting your discovery.

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