Case Study: Improving Processes

Results for our Client:

- Reduced costs of receiving/auditing/paying freight by 50%
- Reduced freight costs as a percentage of sales by 56%
- Implemented multi-year transportation contracts to eliminate annual rate increases

The Problem:

Our client, distributors of home furnishings, opted to change their freight payment terms from "collect" to "prepaid". Unfortunately, this change led to two looming logistics problems:

  1. How to audit, approve and pay thousands of freight bills monthly without paying additional salary dollars for increased accounts payable staff?
  2. How to ensure that they were getting the best service and the most competitive rates from their freight carriers?

The ICC Solution:

Right away, we understood that a significant cost savings opportunity existed in taking on our client's freight bill receiving, auditing and payment services. This not only led to a dramatic improvement in performance and quality, but the cost savings were staggering: we charged half of what our client would have paid through the required increase in salary dollars. This took care of problem #1!

For problem #2, we skillfully negotiated Freight-All-Kinds rates with a carefully selected list of freight carriers, which immediately led to large discounts. To ensure that our client had total control over measuring results, we also placed each of the carriers on the same base rate structures, so that actual cost savings could be measured on a carrier-by-carrier basis.

Also, to protect our client from receiving freight industry "typical" annual rate increases, we built multi-year transportation contracts with freight carriers which totally eliminated an annual general rate increase. Thanks to the combined excellence of ICC staff and our forward-thinking client, our client's freight costs have dropped almost 60%, from 9% as a percentage of sales to 4%! Voila - problem #2 solved!