Managing Inbound Freight Costs

Loette D. King, CPSM, CPSD

Topics

• Why Consider Inbound Freight?• Preparation• The Outsource or In-House Decision• Choosing a Partner• Case Study – Emory University

Why Consider Inbound Freight?

• Too often, Inbound Freight Costs are not controlled• Some suppliers utilize freight as a revenue center• Some suppliers pass along the actual cost – but is the

cost high or low?• One of the most overlooked areas for significant cost

reductions• Any savings in inbound freight costs provides

additional funds for research or operations

Preparation

• Review existing charges• Evaluate your potential opportunity• Determine which suppliers are best suited for the

program • Federal Grant Concerns• Departmental Concerns• Accounting Systems

The Outsource or In-House Decision

• Inbound Freight Management can require intensive administration, including – supplier setup and follow-up

– ensuring correct billing

– customer communication

• In-House freight management eliminates Provider fees, but requires significant internal resources

• Outsourcing removes the operational burden of program management

Choosing a Partner

• Determine your Expectations– System integrations (e-Procurement and ERP)– Assistance with communication– Interaction with the suppliers during enablement– Follow through with unmatched charges– Available reporting– Due diligence– Your level of control during implementation

• Check with your Preferred Carriers

Case Study – Emory University

• Implementing a freight management program needed to be simple and require a small investment of our time.

• We also had the following special requirements in order for us to commit to a specific Provider:– Process must work with our e-Procurement and financial

platforms – Billing must be linked back to the accounting provided on the

PO– Data must be provided in a manner which allows our

customers to easily track their shipping costs– Reporting which allows for monitoring of the program as well

as internal analysis

Finding A Program To Meet Our Needs

• Rollout began in Fall 2012.

• The first phase included 12 suppliers and lasted 4 months.

• Our Provider contacted the suppliers with the pre-approved communication tools

• Customer communication

• Monitoring of savings

Case Study – Emory UniversityImplementation Process

• Our provider supplied recommended drafts of supplier and customer communication, which were tailored to meet our needs.

• Customer communication was further customized to include information on how customers could view their shipping charges for each PO.

• Communication was posted on our website and presented to various campus groups.

Case Study – Emory UniversityCommunication

• Following the initial success of the first phase of implementation, we expanded to include to suppliers with preexisting agreements with our provider.

• One year into the program, Emory had enabled 230 suppliers, capturing over $260k in savings .

• On March 7th, we began enabling our entire supplier base into the program.

Case Study – Emory UniversityCautiously Widening Our Scope

Case Study – Emory UniversityThe Trends

Case Study – Emory UniversityThe Numbers

• In March 2014, we began enabling our entire supplier base into the program.

• We needed to make some changes in our processes– Send a list of all of our suppliers to our provider

– Send data related to every PO and invoice to our provider

– Update shipping instructions associated with all of our POs

Case Study – Emory UniversityMoving Forward Into Full Implementation

If non-negotiated freight charges apply, ship via FedEx and bill third party to FedEx Account # XXXXXXX and insert PO# in Recipient 2nd Address field. For free freight and LTL shipments, please use your preferred carrier.

Case Study – Emory UniversityPO Shipping Instructions

Case Study – Emory UniversityThe Results

• Significant savings for the university– Emory has maintained a conservative estimate of $22

savings per PO. – The most conservative overall savings exceeds $260k for a

very small portion of our supplier base.

• No negative feedback from customers

• Strong Strategic Partnership with our Provider and our Shipper

• Considering expanding to LTL shipments

Questions?

Loette D. King404-727-0909

loette.king@emory.edu