Supply chain directors have a lot to keep track of within daily operations, including managing freight costs. Technology has definitely enabled better control managing costs, and more options are available for managing the supply chain network, including an automated transportation management system. Keeping tabs on freight costs is key to lowering shipment costs, and a functional transportation management system (TMS) can make it all possible.
Unraveling the Mystery of Hidden Costs in the Supply Chain
Supply chain managers need to focus their attention on hidden costs. To do this, they must first accept the need for a reliable transportation management system. A TMS can be critical for many shipping and truckload management networks, including:
- Manufacturers that handle large bulk orders.
- Brick-and-mortar and e-commerce businesses.
- Retail businesses that need accurate shipping data.
- Distributors who oversee shipping and handling of loads.
- Supply chain management professionals that need visibility and connectivity.
- Companies that provide logistics services, including 3LPs and 4PLs.
Examples of Three Commonly Overlooked Freight Costs Found in the Supply Chain
Within the typical supply chain network, three commonly overlooked expenses can quickly add up. When multimodal freight spend areas get out of control, they can quickly derail the most potent supply chain and quickly eat into any profits.
Free Shipping Expenses
Special Delivery Services
Shippers that offer unique services such as guaranteed delivery, overnight or two-day delivery, and unique content handling services automatically incur higher fees. Any specialized shipping service will be inherently more expensive than standard shipping and will often incur additional fees. These fees, of course, must be absorbed somewhere in the chain to avoid the total cost being handed directly to the customer. This adds to the freight costs shippers have to consider when budgeting and planning for load capacity.
Another typical expense that often slips through the cracks and is not given much consideration until the fees stack up is the size of shipment loads. There can be a big difference in shipping costs and fees between a load made up of 100 smaller shipment orders and a load of the same weight that consists of only 20 shipment orders. Freight costs associated with high-volume loads can be challenging to plan for but critical for successful profit predictions.