New research by Supply Chain Consortium on Carrier Sourcing Strategies

Filed in archive Research on May 26, 2006

Rising fuel costs are eating away at retailers' and manufacturers' profits and driving up the price of goods for their customers. At the same time, today's shorter delivery lead times and reduced inventories demand a higher level of transportation service throughout the supply chain.

Although organizations cannot control fuel prices, they can cut transportation costs by ensuring that they have the most effective carrier sourcing process and rates possible. A recent Supply Chain Consortium benchmarking and best practices survey of 100 top retailers and retail suppliers found that nearly a third were off target concerning their carrier shipping rates. For instance, 82% of shippers using ocean transportation reported that their rates were better than other shippers with similar volume and service requirements. Since only 50% of shippers can realistically have better than average rates, this means that 32% of those asked were overly optimistic about their sourcing successes.

A few other key findings of the Carrier Sourcing Strategies and Tools report, summarized by Business Wire, include:

-- Bid methodologies should be flexible and offer carriers the opportunity to propose solutions that best fit their capabilities and network.

-- Collect the data needed by carriers to aggressively bid on your freight. Leverage the characteristics of your freight that are attractive to carriers.

-- Build trusting relationships with carriers. For incumbent carriers, measure performance in an open and equitable fashion.

-- Understand that shippers achieve higher levels of service and better supply chain integration by focusing on core carrier programs.

-- Keep in mind that ocean and air transportation propose unique challenges in developing carrier relationships.