21 Mistakes adding cost & killing productivity in your warehouse #16: Use of multiple freight systems

Most if not all carriers today will want you to give them your freight despatch information electronically.  Whilst there are still plenty of circumstances where a hand written consignment note is unavoidable, the processing of manual con-notes is more expensive.  To make this easier for you and for them they have developed computerised freight management systems.  Unfortunately these systems are designed to work with one carrier (i.e. the carrier providing the system).  This means that when you inevitably need to use the services of a different carrier that is either cheaper or provides services that you cannot get from your other carrier you end up with another freight system.  This can end in multiple carrier specific freight systems.  This is a mistake, it is better to have a single (paid for) freight system.  Why should I pay for something that I can get for free, you ask?  Well I’ll tell you.

Carriers don’t want you to use anyone else for your freight, a single carrier system tends to lock you into that carrier.  Once you break this barrier and have multiple systems you now have a training load to learn an additional system.  It may also take different sized labels and so you have an additional critical supply to manage.  You have just added more points of potential failure.

You have now also split your data into multiple systems.  The 21^st century more than any other is the age of data and you should regard your data as a gold mine to be guarded and protected from loss and fragmentation.  What use is my old freight data apart from looking up old consignment notes for Proof of Delivery requests, you ask?

Freight will be one of your company’s largest costs and not being able to measure and report on its performance and costs as a whole package, is a significant deficiency in your reporting.  Freight cost reporting is significantly easier if you have all the data in one multi-carrier system.  A multi-carrier system lets you extract data from all of your services so that you can get it costed by alternative carriers when you perform a freight review; which you should do annually.  Call me if you have never done a carrier review, we do this quickly and cheaply for you, even if your data is fragmented.

In addition to managing your freight costs, if you tie back your freight data to your order management system you will now be able to do better Cost To Serve analysis of your customer base to determine relative profitability of different customer groups.  This is very useful to assess the underperforming areas of your business.

If you have a large number of shipments per day there is a significant productivity gain to be made from having your freight system integrated to your WMS or order management system to eliminate data entry.  Creating freight labels at order confirmation or before each order pick (see no.15 on speeding the packing process) is a huge productivity booster.  You only want to integrate one system not four or five so this means you need a multi-carrier system.  One of our clients integrated their freight system and saved one full FTE*.  At around $55,000 p.a. for a storeperson for a development cost of only $5000 this had a payback of less than a month!
*FTE=Full Time Equivalent, or the labour equivalent of one person working full time.

There are three major multi-carrier freight systems currently available:

1.    IFS Smart Freight

2.    Supply Master

3.    Moveitnet

All are good and capable of being integrated with a host system.  Their cost structures and functionality vary so look at all three and choose the best one for your circumstance.

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