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I had the distinct pleasure of being a panelist at the Transportation and Logistics Council Annual Meeting in St. Louis, MO last week. The title of the session was "Saving Transportation $$$. My presentation focused on three key areas, Carrier Selection and Evaluation, Contract Negotiation and Auditing and Performance Measurements. Here are some key points from that presentation.
Carrier Selection and Evaluation: First and foremost, focus on the customer. See the selection process through the eyes of the customer. What is the customer's perception of the value received? Cheapest is never the BEST! Least cost consistent with the service required and offered is the best. Do you know the difference between cheapest and least cost? There is a great motivational poster I recently saw titled "Success". It states "if we do not take care of the customer someone else will". What a great message.
Contract Negotiation: Remember, contract is not a four-letter word! Over the years we have seen reluctance on the part of shippers to enter into contractual agreements with their freight carriers. Why? Are they afraid they will have to make a commitment? Yet they always want a lower rate. Contracts protect BOTH parties. Shippers and carriers must be prepared to share information on an "Open Book" basis. Remember, for successful long-term business relationships shippers and carriers must be partners and as partners they should be looking out for the financial well-being of the other party.
Auditing and Performance Measurements: Both parties MUST create a systematic examination and evaluation of all Processes. Create a defined audit strategy and plan of action. Evaluate existing controls and make sure they work. If not, modify them to ensure they work. The audit process should include goals to constantly drive out costs for both parties. Create an environment for periodic business reviews between the parties to ensure that everything that's supposed to happen is in fact happening. Be sure to assess customer feedback and remember that includes internal as well as external customers. Failure is not an option.
Anthony Nuzio is the President of ICC Logistics Services, Inc and a globally recognized expert in the transportation and logistics field. He is a former adjunct professor at Nassau College and the U.S. Merchant Marine Academy and works with a team of skilled professionals to achieve bottom-line cost savings. Visit Anthony on the web at http://www.icclogistics.com/. Click here; to learn more about Anthony.
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