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FREIGHT COST REDUCTION ( Own or Hired )

The challenges in every day life of logistics dept is to reduction of freight cost. So the homework need to be done on How ? Lets took   example If it’s a daily route somewhat near to warehouse its better to use own or dedicated vehicle Good Service 24*7 availability Proper coordination If there is some return goods can be managed on same freight Points known so less chance in delay Only thing need to consider if paying on per km , need to calculate on variables ( Fuel Price Escalation , Maintenance etc ) But on the same scenario If it’s a far of place & frequency is less Up Down costing will be more Long distance time coordination will be a issue Frequency is less so liability will also be less. On any scenario need to calculate, but always if the service is own its better but on serviceability point not on cost always . Sumit Chatterjee Senior Supply Chain Manager Dream Bake Pvt Ltd ( Brand Winkies...
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FREIGHT COST CALCULATION

  The important question is to how to calculate freight cost ?  The distance from x to y certain transporter want x amount . For Ex take certain parameters before negotiation PER TRIP FREIGHT Kolkata to Guwahati  present mkt rate Rs 60 k Distance 1010 km Approx.3.5 mileage so Diesel 78 / per liter Diesel costing approx. :- = 1010/3.5 = 288 ;  288 *78 = 22.5 k Standard time :- 5 days  So   Driver Salary 20 k , per trip approx. 5 k Maintenance monthly 10 k, per trip approx. 2.5 k EMI :- 20 k monthly, so per trip 5 k So costing coming around 35 k Misc 5 k Approx. 40 k will be grand total On per trip transporter is charging 20 k profit . If the homework is done , you are in a position with the parameters to negotiate and deal with a transporter . Its very much important to negotiate on the right path.  Also keep in mind payment terms , return load and market demand and supply for the same. For ex if there is no return load transporter will charge retu...
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FREIGHT COST CONTROL

As a organization freight cost increasing it’s a concern and the stereotypes are Fuel price escalation Driver salary increase Maintainace cost escalating No the above mention factor might not be the reason Factors affecting freight cost increase Geographical location :- For Ex If you are manufacturing at Kerala India and your main market is Jammu & Kashmir India , the position of the factory is wrong, need to concentrate on the same Product Weight :- Due to market competition if your product weight is getting reduced , your per kg transportation rate will increase. Packing size :- Concentrate on your pack size , if its bulky taking more space so less value materials can get travelled Product Margin :- It might be the scenario that some extra freight cost is there but as per profit margin it can be maintained. Freight Analysis :- Keep an eye on freight bill, if you are paying per km ( Up & Down ) or a fixed rate...
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