Manufacturing

Category:     LTL Freight

Savings:       16%

The swift rise in fuel prices has impacted businesses in every industry sector world-wide, prompting many companies to search for methods of controlling increasing costs in order to remain profitable. One such company recently approached TradingPartners for assistance in managing its less-than-truckload (LTL) freight service spend. As a large, international manufacturer and service provider, the company needed to control its future costs for shipping its mechanical parts and machinery to customers across the country.

The client came to TradingPartners in contract with seven different carriers, each running on a different contract cycle. Because of the inefficiencies and confusion this situation caused, the company’s goals in collaborating with TradingPartners on this project  were not only to identify cost savings, but also to consolidate seven carriers down to two or three and execute one contract cycle for all of them.  

After 33 carriers were identified nationwide, through TradingPartners‘ supplier augmentation services, 11 were able to meet all of the detailed project specifications and participate in the spend negotiation. The carriers were given the option to bid on a one- or two- year contract. This information allowed the client to form an implementation strategy based on the pricing differences between the two contract lengths.

The spend negotiation event identified an overall savings in excess of $615,000; over 7% savings on the client’s previous LTL costs. More importantly, the project provided security and predictability for the client through fixed costs that could be implemented through one- or two-year contracts. Because there was very little difference between the savings identified for the one- and two-year contracts, the client decided to implement two-year contracts, which had never been possible prior to the spend management project with TradingPartners.

Additionally, this process made it possible for the client to align all of its carriers on one contract cycle, making it easier for the client to manage their carriers and dedicate less time to maintaining contracts and agreements.