Today’s Logistics & Supply Chain Managers have a pretty good overall feel for the market. They manage KPI’s, keep their budgets in check and benchmark partner performance all while leveraging their spend to get the best deal. The result: roughly 80% of the overall supply chain spend for an average enterprise is well managed. So what about the rest?
The other 20% of supply chain spend is buried in supplier invoices or shows up in nasty service provider fees that rarely produce a good outcome for either party. Supply Chain Brain recently reported “non-core spending” comprises anywhere from 15 percent to 40 percent of the average business’s revenue.
This really adds up but rarely comes across the Logistics Team’s Desk in real time. Here are the top offenders when it comes to generating “Hidden Logistics Costs” – hint There’s no such thing as free shipping:
Marketing
While we love marketing folks for their trendy styles and spunky happy hours, these people didn’t end up with finance degrees without cause. Marketing is fast paced, complex, collaborative, and deadlines come with high stakes. What happens if the tradeshow booth never arrives and the team looks foolish at the event? Or, who wants to deal with the CEO scrambling out the door for an overseas trip only to find his new promotion materials didn’t arrive?
These scenarios really freak marketers out but they aren’t logistics folks and don’t have the experience to manage transportation themselves and often times default back to “letting the vendor ship it”, which is never the most economical option. On top of this, in some cases logistics costs can make up as much as 40% of marketing material costs.
Procurement
When an executive comes on board and wants a new desk or the CEO wants to upgrade the conference rooms, they often have unrealistic expectations on when things must be done. This puts pressure on the facilities and procurement teams to speed things up. One of the levers that’s easiest to pull is to get quotes for “expedited shipping”. When a supplier shops for your best option on freight, they rarely have YOUR best interest in mind. For that reason, it’s risky to let them route your freight, especially when time is of the essence because time is very expensive in shipping.
Finance
When something “has to be there” finance teams mean business. This really wreaks havoc on your parcel budget when the Analyst grabs a FedEx label and checks the “First Overnight” box when “Standard Overnight” or “2 Day” would be fine (or possibly even US mail with an email letting them know “check’s in the mail”?). Or even worse, when a letter envelope is shipped but the weight is inappropriately filled out by the Accounts Payable guy and the letter envelope is billed as a 1 LB parcel, ugh. Several dollars, every shipment, flying out the door without you even knowing about it.
More About Boxton
At Boxton, we’re building the future of enterprise logistics but automating best in class processes through easy to use management software that keeps team’s moving forward, without overspending. We’ve built our platform and methodologies on the core belief that shipping should be easy, for everyone – and nothing on your invoice, should ever be a mystery.
