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Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
Performance-Based Freight Management
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Performance-Based Freight Management

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Presentation on the gain sharing, pay-for-performance freight management model given at the Missouri Association of Manufacturers conference October 19, 2011.

Presentation on the gain sharing, pay-for-performance freight management model given at the Missouri Association of Manufacturers conference October 19, 2011.

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Transcript

  • 1. Performance-Based Freight Management and Your Bottom Line
  • 2. 2
  • 3. Freight 58% Inventory 30% Admin Warehouse 4% 8%Why Challenge Freight Costs?
  • 4. Freight Because 58% Inventory 30%the Upside is Huge! Admin Warehouse 4% 8% Why Challenge Freight Costs?
  • 5. What Impacts Freight Costs? Over 750 Different Charges!
  • 6. Discount, What Discount?Prices increase on averageevery six months.
  • 7. Current Pricing Methods Established in 1936.
  • 8. 2010 University of Tennessee StudyCloser Lookat Why Changeis Needed
  • 9. 2010 University of Tennessee StudyMany shippers are unaware ofadditional accessorial charges statedin the carrier’s rules tariff, which are“incorporated by reference” on the billof lading and/or in the pricingagreement you have with your carrier.A typical rules tariff can run between30 pages to over 200 pages per carrierand are subject-to-change with nonotice to the shipper.Alternatively, a shipper may require the carrierto utilize a common rules tariff, such as theSMC3 190 Rules Tariff, or write theirown rules tariff in conjunction withthe carrier.
  • 10. 2010 University of Tennessee Study1. 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. Freight Pricing Models Savings Traditional 3PL “Shared True Brokerage Savings” Gainsharing Markup ? Savings Wholesale Cost Shared ? ? ? Costs Disclosed
  • 12. Freight Brokerage with Markup Savings Traditional Brokerage Markup Wholesale Cost ? ?
  • 13. Hidden Markup Savings Traditional 3PL “Shared Brokerage Savings” Markup Savings “Hey! We saved you Wholesale Cost ? ? 10%! Let’s split it! You still don’t know what the real costs are. ? ?
  • 14. Gainshare Model Savings Traditional 3PL “Shared True Brokerage Savings” Gainsharing Markup ? Savings Wholesale Cost Shared ? ? ? Costs Disclosed
  • 15. Gainshare Model Transparency Partnership Pay For Performance
  • 16. Gainsharing maximizes cost savings while increasing performance. 16
  • 17. Priority Gainshare Proprietary1 Rate Base Proprietary rate base and buying power Wholesale2 Buying Power Millions in freight managed annually Contracts Our contract, not the carriers3 & Legal Technology4 Platform Online TMS for easy scheduling/tracking Consulting &5 Operations Weekly auditing, reporting & support
  • 18. Priority Gainshare Proactive partner Entire supply chain Minimal operational changes Empower shipping department Simplify freight process Create a profit center
  • 19. How it Works Analysis (entire supply chain) Rate negotiation (our contract) Publish tariff (online TMS) Freight department one page guide Weekly auditing and reports Bill a percent of savings
  • 20. Weekly Freight Report Example You Wont Get This From a Shipping Co. or 3PL 20
  • 21. Example:One Weekly Report:$4,440.08 In Savings 2121
  • 22. Benefits Long-term cost reduction Reduce/Eliminate price increases Empower shipping department All Freight Categories
  • 23. The Freight Dept:More time forstrategic,profit-producingwork 23
  • 24. Why It Works
  • 25. Why The Carriers Like Us 25
  • 26. Average client savings since 1998.
  • 27. Lighting ManufacturerFreight 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. 27
  • 28. Parts DistributorFreight costs down 56%.Total carriers from178 providers to 6Damage claims down 400%Freight is now a profit center 28
  • 29. Tape ManufacturerFreight costs down by 30%Total carriers from 30 to eightMiddlemen (profit margin) between Mexico andUnited States shipments cut from 10 to only three.Delivery time reduced by 50%. 29
  • 30. Thank You 30

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