5 Ways to Create a Competitive Advantage with Shipping Policies
Posted on May 25, 2023
Written by Mickey Powers
As a supply chain or logistics professional, you know how fast-paced and competitive the shipping world is.
Every day, new solutions are introduced that claim to make freight shipping faster and cheaper.
How are you supposed to keep up with this ever-changing landscape?
The first step is to remember that logistics cost management is a company-wide effort, and that effort must be tailored to your company’s unique business model.
To optimize logistics costs and gain a competitive advantage, all supply chain links must be cohesive — including the relationship between multiple departments within shippers’ and carriers’ companies.
Updating your shipping policies can foster a stronger relationship with your carriers, simplify carrier negotiations, and gain a competitive advantage.
Discover five ways to enhance your shipping policies for better outcomes below.
Develop a Core Carrier Group
The first step to getting more out of your company’s shipping policies is to develop a core carrier group and treat members as true partners or extensions of your organization.
What is a core carrier group?
Simply put, it’s a limited group of carriers that you’ve identified as business partners.
These carriers assist you with your freight deliveries and execute based on mutually agreed-upon performance and price requirements.
They can help you increase efficiency and optimize your LTL freight shipping costs.
When selecting core carriers for your company, be sure to consider the following factors:
- Capacity: The carriers’ vehicles must have the ability to transport your products efficiently.
- Financial stability: The carriers should be in good financial shape and willing to reinvest in their businesses.
- References: Only work with carriers with solid references from past clients or those that are familiar with your specific line of business.
- Technology: Look for carriers that keep up with the latest technological developments and incorporate them into their business strategies.
- Flexibility: Ideally, your core carriers will be flexible and willing to respond quickly to special requests.
- Service area: Make sure the carriers’ service area aligns with the locations where you need to deliver freight.
- Rate: Carrier rates are essential, but don’t sacrifice service quality for a lower price. It’s better to spend more on reliable service.
If you need help managing your core carrier group, consider investing in tools like transportation management software.
These solutions can help you manage your core carrier group and access real-time data.
Aim to Become More Carrier Friendly
You’ll have a much easier time building solid carrier relationships and gaining a competitive advantage if you strive to become a more carrier-friendly shipper.
What does carrier friendliness look like?
Here are some specific steps you can take to improve your company’s approach:
- Ensure you always provide the correct freight to the most suitable carrier based on their strengths and networks.
- Prioritize predictability and commit to being a reliable shipper and professional partner.
- Automate and electronically connect specific areas of your business for increased efficiency and better results.
You can use technology to streamline numerous aspects of the shipping process — and enhance your relationship with your carriers.
For example, transportation management software can help you simplify pickups, create electronic bills of lading, and handle electronic data interchange (EDI) billing.
Some other ways to be more carrier friendly include being flexible with your pickup and delivery hours and making sure you’re available when your carriers need you (rather than always making them adjust to your schedule).
Quickly loading and unloading freight is also appreciated by carriers, especially if they’re helping you out with a last-minute task, assisting at the end of the month, or have an extra-busy schedule.
When you collaborate with your carriers and treat the relationship as a partnership, they’ll be more inclined to go the extra mile to benefit your organization.
Be sure to conduct regular reviews, too.
Set specific key performance indicators (KPIs) for your carriers and review them to see how well everyone is doing when meeting or exceeding their goals.
If a carrier consistently meets or exceeds goals, consider that during future freight rate negotiation meetings and/or routing decisions.
Align Inbound & Outbound Shipping
When your company’s inbound and outbound shipping processes are optimized and aligned, all aspects of your shipping relationships and supply chain will improve.
Here are some specific steps to take and elements to remember to achieve this alignment and make life easier for everyone involved in your processes:
- Ensure the same carrier partners hauling outbound are also used for inbound shipments. Doing this will increase volumes, guarantee high service levels, and typically reduce costs (keep in mind that this practice may require a change in product purchasing terms, so your purchasing department will need to buy in).
- Inbound visibility will increase. You will have a better view of when to expect inbound shipments.
- The volume will increase for your core carrier group, which could lead to more favorable pricing for both inbound and outbound.
- Inbound shipments will ride on your designed agreement with the carrier/partner. Remember the liability aspect of your carrier/partner agreements as well.
This knowledge will help you reduce liability, avoid extra costs, and maintain solid relationships.
Consider Your Part in Your Customers’ Supply Chain & Success
One of the most effective ways to become more competitive in your industry is to consider your role in your customers’ supply chain and business success. Furthermore, is your supply chain service billable?
In other words, remember that your company’s supply chain is just one part of a larger supply chain. When you and your shippers commit to helping your customers succeed, everyone’s experience improves.
Here are some questions you might want to ask yourself when evaluating your role in your customers’ supply chain and determining if your service can be monetarily measured:
- Can you measure your company’s value in having the right product delivered in the right place and at the right time?
- Can you measure your value of having a lower delivered cost of goods to your customer?
- Can you measure packaging, carrying costs, warehousing, “just in time,” and other ancillary benefits to your customer?
Consider the value you’re currently providing and how your company can improve and benefit from it. Additionally, ask yourself if you can generate more revenue by going the extra mile for your customers.
Potentially utilizing PPD & Add, include the appropriate value provided by doing business with your company. Remember that any additional money is top-line revenue, too.
Pay Carriers According to Agreed Terms
Always pay your carriers according to previously agreed-upon terms. Nothing damages a professional relationship like being paid late or paid incorrectly.
Ensure you have a detailed contract for each carrier you’re working with. Look over the contract carefully, and have them do the same, so everyone is on the same page regarding rates and payment dates.
If you need to make changes to payment terms or negotiate carrier rates, act sooner rather than later.
Be upfront and transparent instead of waiting until the last second (this creates frustration for your carrier and extra stress for you).
Bonus Tip: Use Transportation Management Software
When you do everything manually, it’s easy to make mistakes that result in your carriers being paid late or incorrectly — especially when working with many different carriers, each with their own contracts.
Luckily, technology can help you avoid these issues without spending more time on invoicing and payment collection.
Transportation management software doesn’t just help you optimize LTL shipments or collect delivery-related data.
It can also help you ensure you pay your carriers correctly.
Transportation management solutions help you save time and eliminate human error, giving you more time to focus on other elements of your business.
With the right transportation management solution, you can easily organize and optimize carrier contracts and keep track of essential information.
Your software provider can also help you handle other essential tasks, such as carrier contract negotiation, parcel rate negotiation, and freight negotiation with shipping companies.
Enhance Profitability with Improved Shipping Policies
From establishing a core carrier group to ensuring you pay carriers correctly and on time, you can take many steps to enhance your company’s shipping policies and gain a competitive advantage.
The right transportation management software or logistics optimization tool can help you carry out all the abovementioned tasks and navigate other aspects of creating a more streamlined shipping process.
Broussard Logistics offers carrier rate negotiation services, shipping contract optimization, freight analysis, and optimization to help you achieve your goals and take back your time so you can focus on other critical aspects of your business.
With over 40 years of experience in the transportation industry, we’ve seen it all and are ready to share our expertise with you.
Request a consultation today to learn more about our transportation management solutions or request a free demo.