Understanding the true cost of that purchase

As a manager, you would never make a purchase without understanding the true cost of that purchase. The same holds true when it comes to understanding the true costs associated with freight management spending and its implications for a company.

freight management

Smaller firms usually cannot afford to hire transportation managers. So what are their options in trying to stay competitive in the market place by finding an effective way to control and manage freight costs. Enlisting the use of a 3PL that provides freight management services is a sure fire way of doing this without affecting the payroll of the firm and is effective in controlling freight costs and managing inventory.  Freight management involves controlling shipping rates, providing detailed and accurate records and supporting warehouse inventory levels at pre determined levels of profitability and much more.

The true cost of shipping is rather involved

The cost of shipping products is rather involved, a lot more involved than one would initially think. It does not just involve the freight rate, it includes the storage of the product, packaging of material, shipping manpower, computer and software that tracks and monitors the products, freight costs, outlays associated with delayed shipments and even worse, back orders, if any. All of these areas must be monitored in order to avoid any careless spending.

One option is the use of a 3PL 

One very effective option in controlling and managing these outlays is the use of a 3PL that offers both a freight management service and a common carrier portal service. Through these services, they can do all of the hard work for you in finding the right carrier at that elusive rate while managing all of the various other aspects we just discussed about inventory and the like. The database that results is also a manner in which these firms use the past data accumulated from previous shipments to accurately find and rate new shipments, spotting trends which are usually positive in nature.

Maintaining the correct inventory level is key

Inventory is one the largest cost components of a firm that must be balanced by accurately predicting reorder points for stock so that a delicate balance is achieved and no large overstock is incurred, while avoiding any very costly back orders. The reorder point formula is one of the most widely accepted ways in creating the proper balancing act between stock out and too costly inventory levels. The reorder point formula is: (Reorder level = Safety Stock plus average daily usage times lead-time). Correctly using this formula will lead small, medium and large firms to achieve stock level nirvana. 

A firm’s profitability will diminish if proper freight rates and inventory guidelines are not used adequately. Managed through a freight management firm such as Skyfer Logistic, you can rest assured that you will be on your way to profitability in no time.

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