MAM Freight Savings Program Presentation


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Missouri Association of Manufacturers and Priority Logistics have partnered to bring a unique and cost-saving program to members. This freight management program is based on Priority's Gainsharing program.

This is a performance-based program which delivers an opportunity for manufacturers to save 20% or more on their freight costs.

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MAM Freight Savings Program Presentation

  1. 1. Freight Savings Program
  2. 2. 2
  3. 3. Freight 58% Admin 4% Inventory 30% Warehouse 8% Why Challenge Freight Costs?
  4. 4. Freight Because Inventory 58% 30% the Upside is Huge! Admin 4% Warehouse 8% Why Challenge Freight Costs?
  5. 5. What Impacts Freight Costs? Fuel l essoria Acc harges C Internal Operations Rate Base Handlin g Betwee n Destina tions Freight ns Classificatio Over 750 Different Charges!
  6. 6. Discount, What Discount? Prices increase on average every six months.
  7. 7. Current Pricing Methods Established in 1936.
  8. 8. 2010 University of Tennessee Study Closer Look at Why Change is Needed
  9. 9. 2010 University of Tennessee Study Many shippers are unaware of additional accessorial charges stated in the carrier’s rules tariff, which are “incorporated by reference” on the bill of lading and/or in the pricing agreement you have with your carrier. A typical rules tariff can run between 30 pages to over 200 pages per carrier and are subject-to-change with no notice to the shipper. Alternatively, a shipper may require the carrier to utilize a common rules tariff, such as the SMC3 190 Rules Tariff, or write their own rules tariff in conjunction with the carrier.
  10. 10. 2010 University of Tennessee Study 1.  Pricing models are outdated. 2.  Too many constantly changing pricing variables for any busy freight manager to stay informed. 3.  Pricing variables change without you knowing about it. 4.  With the strategies and the right tools, shippers can minimize impact on profit.
  11. 11. Freight Pricing Models Savings Traditional Brokerage 3PL “Shared Savings” True Gainsharing Markup Wholesale Cost ? ? ? ? Savings Shared Costs Disclosed
  12. 12. Freight Brokerage with Markup Savings Traditional Brokerage Markup Wholesale Cost ? ?
  13. 13. Hidden Markup Savings Traditional Brokerage 3PL “Shared Savings” ? ? Savings Markup Wholesale Cost ? ? “Hey! We saved you 10%! Let’s split it! You still don’t know what the real costs are.
  14. 14. Gainshare Model Savings Traditional Brokerage 3PL “Shared Savings” True Gainsharing Markup Wholesale Cost ? ? ? ? Savings Shared Costs Disclosed
  15. 15. Gainshare Model Transparency   Partnership   Pay  For       Performance    
  16. 16. Gainsharing  maximizes  cost  savings   while  increasing  performance.     16
  17. 17. Priority Gainshare 1 Proprietary Rate Base 2 Wholesale Buying Power 3 Contracts & Legal 4 Technology Platform 5 Consulting & Operations Proprietary rate base and buying power Millions in freight managed annually Our contract, not the carriers Online TMS for easy scheduling/tracking Weekly auditing, reporting & support
  18. 18. Priority Gainshare Proac;ve  partner   En;re  supply  chain   Minimal  opera;onal  changes   Empower  shipping  department   Simplify  freight  process   Create  a  profit  center    
  19. 19. How it Works Analysis  (en;re  supply  chain)   Rate  nego;a;on  (our  contract)   Publish  tariff  (online  TMS)   Freight  department  one  page  guide   Weekly  audi;ng  and  reports   Bill  a  percent  of  savings    
  20. 20. Weekly Freight Report Example You Won't Get This From a Shipping Co. or 3PL 20
  21. 21. Example: One Weekly Report: $4,440.08 In Savings 2121
  22. 22. Benefits Long-­‐term  cost  reduc;on   Reduce/Eliminate  price  increases   Empower  shipping  department   All  Freight  Categories  
  23. 23. The Freight Dept: More time for strategic, profit-producing work 23
  24. 24. Why The Carriers Like It Because we match the carrier to the freight, which is more efficient for the carrier. 24
  25. 25. 30% Average client savings since 1998.
  26. 26. Lighting Manufacturer Freight costs down 43%. Carrier compliance: from 50% to 100%. Damage claims: Over 2% to less than 1%. Delivery lead times: 3-5 days to 1-3 days. 26
  27. 27. Parts Distributor Freight costs down 56%. Total carriers from178 providers to 6 Damage claims down 400% Freight is now a profit center 27
  28. 28. Tape Manufacturer Freight costs down by 30% Total carriers from 30 to eight Middlemen (profit margin) between Mexico and United States shipments cut from 10 to only three. Delivery time reduced by 50%. 28
  29. 29. Thank You 29