Bringing Insight and Savings to a Retailer’s Freight Spend
AFS helped an agricultural supply retailer achieve freight savings through spend optimization and a more flexible carrier mix, as well as gain benefits from an automated shipping process.
Throughout its 35-year history, an agricultural supply retailer has quickly grown through acquisitions and is poised for additional growth in the coming years. As a result of this growth, the retailer now has production facilities in several states across the United States.
While the growth was mostly positive, it led to a decentralized environment for shipping and little transparency to uncover opportunities for optimization. Plus, the company had limited time to negotiate rates and service standards.
In addition, the retailer’s manual freight shipment process required two employees to be at their desks all day processing orders for shipment. The company’s chief financial officer (CFO) had little time to source a variety of carriers, negotiate contracts, ensure pickups were being made, and evaluate key performance indicators on service and claims.
All the freight negotiating was on the CFO’s plate. Lacking the time to focus on it, the retailer would see freight increases on their shipping invoices but didn’t have the insight to determine why it was happening. These freight increases became especially bothersome as time went on and the situation reached a breaking point. The CFO decided to explore outside resources to evaluate the company’s freight spend.
The CFO agreed to let AFS conduct an audit of the retailer’s parcel and freight spend. AFS determined they could achieve significant savings by negotiating better rates, also they could reduce their less-than-truckload (LTL) spend by adding regional carriers to the mix.
AFS suggested adding more flexible regional carriers to the LTL mix so the retailer wasn’t solely reliant on larger carriers. Sometimes, regional carriers offer shorter transit times, better service, and lower costs.
In addition, AFS implemented their transportation management system (TMS) to automate the retailer’s manual freight shipment processes. The TMS allowed the retailer to use least-cost carriers to reduce cost and keep their bottom-line lean.
An analytics tool enabled transparency in the retailer’s spend and aided in rate optimization to further reduce costs. The retailer also gets weekly reports from AFS on what could have been done differently to achieve more savings.
With AFS’s help, the retailer achieved 22% savings on parcel rates through spend optimization and 7% LTL savings with a more flexible carrier mix. They also benefited from an automated shipping process with AFS’s TMS.
As the relationship progressed, AFS recommended additional services to optimize the retailer’s shipping and uncovered opportunities for cost savings in other segments of their logistics operations. Today, the retailer relies on AFS for LTL, parcel, freight audit and payment, truckload, and international.