Secrets of Transportation Savings: UPS Pricing Veteran Opens the Spend Kimono (Part 3)

Please click here for Part 1 and Part 2 of this series.

Today, we conclude our insights into transportation spend savings, sharing a number of tips from Spend Management Expert's John Haber, an industry price veteran who used to work on the dark -- well, brown -- side of the transportation force at UPS:

  • Competition: Inviting hungry and battle-ready suppliers to the table can be hard, especially in small parcel shipments in the USA. The landscape is improving, however, and there are alternatives to FedEx and UPS. For example, DHL Global Mail still operates in the US, with the USPS handling the last mile to customers. Recent entrants like StreamLite have added to the competition in light parcel (1oz to 5lbs) shipping. And a new product in the market is the hybrid delivery solution SurePost -- where UPS picks up and USPS delivers. FedEx has a similar approach with their SmartPost product, a product that likely will merge with the residential side of FedEx Ground, letting them focus exclusively on commercial deliveries. Other regions have different constraints and opportunities. In the EU, for example, there are numerous small parcel competitors (often in the form of semi-private or publicly owned national postal services) which calls for more complex strategies around developing the best deal for any given firm.
  • In-source or outsource distribution? This question should be asked, robust spend data analysis should be completed to facilitate the decision. After you do your homework, the right answer should come a lot easier.
  • Don't be afraid to call in outside help: obviously John has a slight bias here since he provides consulting and gain-share solutions around transportation analysis and procurement. That said, this is a complex category where products, pricing and even players, change frequently so there is nothing wrong with bringing in external resources to assist. In fact, John also recommends firms such as Intelligent Audit (to assist with freight payment analysis) and Chainalytics (for network optimization services).
  • Bid the spend! If you've done your homework, go ahead and bid your transportation spend -- or at least threaten to do so. Your current carrier's sales rep might try to convince you that their pricing is the way it is, but John tells me that even the big guys have flexibility. But you have to do your homework first and point to alternative solutions.
  • Go out there and reduce costs while maintaining service levels! John's final recommendation speaks for itself. Quality always counts and transportation spend reduction should always be about maintaining or improving service levels -- not the other way around.

- Thomas Kase

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