Like many small businesses, you may not currently have control over the shipments coming into your business. It is common for small businesses to let the vendor shipping the product to you arrange the carrier, select the mode of transportation, and manage the actual pickup and delivery times. In some cases, the convenience of this sort of arrangement may work well for your situation. However, that convenience comes with a cost: you may find that you are paying significantly more for inbound shipping than if you had arranged for it on your own.
Reducing inbound shipping costs is one of the easiest, yet most overlooked ways to reduce your overall transportation expenses. Since you are the buyer of the goods, you can and should determine how those goods are shipped to you. When you control and route your own inbound shipments, you have an excellent opportunity to lower your costs.
Here is a quick, three-step process for getting control of your inbound shipping expenses:
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Look at one or two invoices from your major suppliers. See what dollar amount they allocate for “shipping and handling.”
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Compare your suppliers’ freight shipping rates with the rates you have in place with your preferred shipping provider. If you’re a PartnerShip customer, you can easily log into our website and perform a couple rate quotes to see how your freight rates compare (or just give us a call – we’ll do it for you).
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If you find your rates are lower, draw up a letter for your purchasing department to forward to your suppliers providing details on how you want your products shipped, your small package carrier account number, and your preferred LTL freight carriers (again, PartnerShip can do all of this for you if you’d prefer). The letter also acts as an insurance policy if your supplier mistakenly ships by a carrier not on your routing letter. Having a signed letter allows you to charge vendors back for their mistakes.
Updating your routing instructions with all of your suppliers is the first important step in gaining control of your inbound shipping costs. Ensure your products are delivered to you via your preferred carriers and at your known rates. This takes the unpredictability out of inbound shipping costs, and can save you money in the process.
