A 10-point guide to better LTL sourcing

Jan. 12, 2004
A 10-point guide to better LTL sourcing Conduct smart sourcing1 Know your options All transportation networks are complex and dynamic. It is critical
A 10-point guide to better LTL sourcing

Conduct smart sourcing
1 Know your options — All transportation networks are complex and dynamic. It is critical to understand all lane specifications and volume densities across all modes and geographies. With a holistic view, customers are better equipped to shift shipments from expensive LTL modes to truckload through better planning, identification of back-haul opportunities, and/or better incorporation of privately owned assets. The key message? Without knowing where you stand, it's difficult to know the right path. And without that knowledge, customers in today's seller's market often face the expensive alternative of a price hike.

2 Take on more — Develop an inbound freight strategy to manage freight directly. Suppliers will pass the increased cost of freight on to the customers. At a minimum, assessing the opportunity associated with a terms conversion program would send a signal to suppliers that customers are considering taking away their freight leverage if they do not cooperate. Customers with large outbound volumes can manage inbound freight and gain greater leverage with their carrier base.

3 Conduct better, more creative sourcing — It's critical that customers convey to their carriers the importance of relationships when it comes to a strategic category like transportation. More intelligent expressive bidding sourcing tools can be used to encourage regional carriers to work together to service customer short-haul and long-haul needs. Such a strategy provides customers with an alternative to the high-priced LTL long-haul carriers, or can be used as a leverage position.

4 Consider up-and-coming LTL carriers — The historical notables are not the only choices. Mega-regionals and many emerging regional carriers offer comparable if not better service within their specific geographies.

Increase efficiency
5 Negotiate — If you are a high-volume LTL shipper, work with your carriers on load planning to minimize handling in their network. Negotiate for your piece of the network efficiency achieved.

6 Ensure suppliers are consolidating shipments to fewer per week — Certainly be sure they are only shipping one LTL shipment to you per day.

7 Reevaluate mode breaks between parcel, LTL and truckload — And don't forget hundred-weight programs from parcel carriers.

Track and measure compliance
8 Plug the leaky savings bucket, and maintain zero tolerance — Customers need to design, implement and track better compliance management strategies, and implement tighter controls. Having preferred carriers and aggressively negotiated deals means nothing if people in the field are not using the right carrier or shipping product via the wrong mode.

9 Drive routing compliance — Simplify routing instructions, keep up to date via web communication and make sure expedited shipment requests get adequate consideration. Hold carriers accountable when they ignore your instructions, and get their attention.

10 Be vigilant about carrier performance — Put in place formal loss and damage claims pro grams to keep service levels up, and you'll get a tangible payback from carriers when they drop.

— Jeff Ryan

January, 2004

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