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Why Pay-For-Performance?

January 19, 2011 By

pay for performance freight managementWe follow a strict model of Pay-For-Performance or what some refer to as “gainsharing”. Gainsharing refers to a system in which companies share financial value of performance gains such as productivity, cost savings or quality with their workers or partners.

We believe in establishing long-term relationships with mutual benefits for our clients and ourselves.  Establishing a transparent transactional model via gainsharing creates a foundation for common objectives:

  • Always enable optimum pricing of services.
  • Always share a common mission to minimize costs.
  • Always ensure total visibility of our value.

We continuously assess material changes in freight volume, leveraging capabilities, and other factors to ensure you are achieving maximum savings from our pay-for-performance model. [Read more...]

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Uncover Hidden Costs

January 19, 2011 By Leave a Comment

freight savings analysisIn this economy, companies of every size are looking for ways to lower costs and increase bottom line profits.

One of the line items continually increasing in cost is freight.

Most companies see at least a 3% to 5% increase in freight charges annually. And many times freight increases are buried in the over 750 accessorial charges that can be levied on you. Did you know you give a carrier the right to charge these fees when you sign the bill of lading?

The hundreds of freight classifications change on a daily basis. Classification changes impact cost immediately and usually  without you knowing it. In even the largest of companies it is difficult if not impossible to keep up.
And even companies are losing billions of dollars each year in costs which can be avoided, even the largest Fortune 500 companies continue to operate the Old School way.

Ten years ago we saw looked at the freight industry as missing a strategic and analytical partner in order to optimize the logistics process and lower freight rates as much as possible.

Compare it to an in-house attorney vs. an outside law firm. Or the CFO with an outside CPA firm. Every company has them because in the long run they save the company millions. Our approach is much the same. We create a strategic plan and eliminate avoidable costs.  The result is thousands or even millions in cost savings.

More about the Freight Savings Program.

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How The Freight Savings Program Works

January 19, 2011 By

Every business wants to reduce cost, but how do you do it without impacting quality or service? Freight transportation costs are one of the largest expenses for many companies, yet for even the largest Fortune 500 companies with large freight departments, there is significant opportunity to reduce cost and increase efficiency

The Traditional Bid Process Doesn’t Work

The way companies typically tackle lowering freight costs is through competing bids. The problem with the bidding process is that it always delivers only marginal cost savings.

This is inevitable because a profit motive is present. Whenever a markup is added to the freight, you are never going to see the true cost of shipping your goods.  Costs are reduced slightly, but the real root costs are not shared, and you never realize maximum, long-term cost savings.

This is equally true with traditional logistics firms, where typically a markup still exists, even when their model is positioned as “pay-for-performance.”

We Flip the Process 180 Degrees.

Instead of just simply getting bids on your freight, we partner with you as a consultant. We develop a business plan and budget using our team of logistics professionals. Priority has saved millions for clients since 2001.

Our freight analysis team determines a price and works with you and suppliers. The result is a business plan free of hidden charges and bogus discount rates. You continue your core supply chain process, often with the same suppliers. But now, your playbook includes dramatically lower costs and increased efficiencies.priority-performance-based-shipping

Weekly Reports Show Ongoing Savings

We analyze your shipping costs on a weekly basis and present detailed reports of your savings at every step in the supply chain. We generate weekly audits that assure suppliers are using the correct rates and acessorial charges on your invoices. You then pay the carriers knowing everything is correct.

Compensation Based Solely On Performance

As compensation, priority receives a portion of the savings generated from your current baseline rates. Our analysis and negotiating services are free. We only benefit by saving you as much money as possible, while delivering better and more efficient services. Isn’t that the way it should work? Compensation based on performance only?

The First Step: The Freight Review

To determine how much you may be able to save, we conduct a Freight Review. This process usually takes 3-5 days and will outline recommendations and strategies for reducing freight costs. We review the recommendations in person or via phone, which usually takes 30 minutes to one hour.

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Why Challenge Transportation Costs?

January 18, 2011 By Leave a Comment

freight-costs

. . . Because the numbers are huge.

On average, freight transportation costs exceed 50% of total logistics expenses for organizations handling products.  Freight transportation costs can vary as much as passenger transportation costs. There are literally hundreds of variables that impact the bottom line cost you pay.  This leaves an opportunity to uncover savings using our unique methodology.

Lack of standardization and industry regulation causes confusion and inefficiencies and burns working capital.  Our experience bears evidence that most companies can realize a 15% to 50% savings with NO change in their existing program or comprising service.

Learn how the Freight Savings Program works.

Filed Under: Blog, Featured Content, Priority Logistics

Save 20% to 45% on Freight

January 17, 2011 By Leave a Comment

Would this level of savings impact your bottom line?

For the past 12 years, we’ve been able to save over $1 billion in freight charges for small shippers to Fortune 500 manufacturers.

We analyze all carrier portfolios, modes of transportation, classification systems, assessorial fee structures, available rebates and discount opportunities, route selection criteria, and much more to determine areas for improvements.

Once we determine the right  portfolio of carrier partners and associated working models, we typically restructure or rewrite carrier contracts ourselves to the maximum benefit of our clients, and institute a series of checks and balances to ensure ongoing compliance with services and billing practices.

In rare instances, even if we determine all existing carriers and modes of transportation are employed by a client are providing maximum efficiencies, we are still able to negotiate much better rate structures with such carriers to reduce overall expenses. No matter the size or sophistication level of our clients, we always provide consulting and contract management services to everyone, as we are certain to uncover opportunities for improvements which can be incorporated into existing programs whether or not additional services are appropriate.

Should Your Vendor Really Be Writing the Contract?

Freight transportation contracts between carriers and shippers are typically written by carriers.  As a result, often inherent terms and conditions are written to favor carriers, and are typically void of critical performance measurement factors which benefit shippers.  We write our own contracts with carriers on behalf of our clients, thus ensuring more favorable terms and conditions and delineation of performance measurements with financial consequences towards adherence to such measurements.   Additionally, our weekly auditing of the invoices assures compliance.

Domestic Freight Auditing

Carriers often make billing mistakes, whether through charging for late deliveries, incorrect rates and/or weight charges, incorrect classifications, overcharges and missing discounts, duplication of invoicing, etc.  Such mistakes in obligations and/or billing costs businesses money.

We also audit both historical and ongoing billing on a regular basis to ensure mistakes are monitored and billing reflects actual and verifiable services, and collect appropriate refunds whenever possible (typically uncovering up to 5% in additional refunds/discounts).

It cost nothing to determine what impact our program can have on your bottom line. Request a Freight Review to get started.

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