How to Recover Over Half a Million Dollars and Take Control of Your Logistics
An ICC Success Story
The Problem: A manufacturer of generic drugs was facing an interesting and often common business challenge; on the one hand business was exploding and expectations were that sales would double over the next 12 months. On the other hand, logistics expenses were spiraling out of control and slowly eating away at the company’s profit margin. Additional sales did little to help this ongoing issue. A revolving door within the transportation and logistics department made a big problem, even bigger. With each new employee, decisions were being made without a clear and defined direction and arbitrary changes in service providers was creating total chaos.
The Solution: The Company asked ICC Logistics for help. Luckily, we’ve been through this scenario many times before. We performed an analysis of the company’s product shipping characteristics, shipping lanes, customer ordering habits, delivery time requirements and overall logistics spend by the various service providers for all shipment types, including small package shipments as well as LTL and Truckload shipments. ICC determined despite the “85% discount” the carrier reps were boasting about, the company was actually grossly overpaying for shipping. It was clear ICC needed to perform several benchmark analyses for parcel shipments as well as for LTL and Truckload shipping.
The Results: The results of the parcel shipping analysis indicated that the company was overpaying for parcel shipments by approximately 12% compared to other shippers with similar shipping volumes and product characteristics. The company was able to negotiate with the parcel carrier and ultimately achieved parcel savings in excess of $30,000 annually.
But the results didn’t stop at parcel. The LTL and Truckload benchmark analyses yielded a much greater savings opportunity. ICC negotiated a multi-year contract with the client’s major LTL carrier, changed the base rate level, drastically reduced the fees the carrier had been charging for expedited shipments, and implemented a reduced Fuel Surcharge Table that caps the fuel surcharge so the client will never have to worry about fuel costs if and when they get out of control. The multi-year savings will positively impact this company’s bottom line by over 30% annually, resulting in over $600,000 in pure bottom line profit over the next two years.
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