In today’s economic climate, finding ways to curb spending internally can help companies increase their value as much as adding revenue to the top line. Presented here are two creative ways to cut costs.
Why a Service You’ve Never Heard of Is the Smartest Move You’ll Make This Year
It seems as if someone is coming at you every day with a product or service that is guaranteed to increase profits—and at a cost they promise will be minimal. Most of these miracle strategies deliver far less than they promise, and often serve only to increase your employees’ workload and complicate your accounting. But there is one new service that is worth signing up for: vendor screening.
Vendor screening service is a relatively new concept that was developed in response to the proliferation of government rules, regulations and fines since 2001. Sarbanes-Oxley, the Patriot Act and SB 657 have all changed the business landscape. In addition to making sure insurance certificates are up to date and W-9s are authentic, businesses have become responsible for verifying that the vendors and suppliers they use are innocent of everything from slavery in the supply chain to money laundering by the executives. The time and expense of complying with each and every one of these mandates is considerable—not to mention the task of keeping on top of new legislation to make sure you know what to comply with.
Vendor screening service is a relatively new concept that was developed in response to the proliferation of government rules, regulations and fines since 2001.
A vendor screening service takes away all the headaches—and the expense, as well. In what is a relatively simple process, they get all the information on your vendors, and then do the screening for you. The screening results can be tailored to your specifications, and all the reports are stored in an easy-to-access web repository, complete with copies of all the documents you need to have available. Since this can’t be done for free, they naturally charge for it—but they charge the vendors, not you! Vendors pay willingly because it provides an easy way to ensure the reports they give you are accurate and submitted on time. Each vendor pays a fee that is generally under $200, and you pay nothing. Nada. You free up your employees for more valuable tasks, get an easy-to-use database with all the information you need on all of your vendors, and save the cost of doing the screening yourself. Isn’t a smart move like that a great way to start the new year?
Don’t Let Carrier Profits Come at Your Expense!
If you’re paying attention to shipping news, you know that once again shipping rates have increased with the new year. And if you’ve done the planning you should, you tried to factor those increases into your projected shipping costs. Unfortunately, that’s easier said than done.
On Jan. 1, FedEx and UPS both increased rates by an average of 5.9 percent. This doesn’t mean you can take your 2011 shipping costs and add 5.9 percent to get an estimate for 2012. The 5.9 percent is an average across all express services, all weights and all zones. Unless your shipping profile perfectly balances across all those things, you won’t see a 5.9 percent increase. In fact, it’s not hard to see that almost no one is going to see a 5.9 percent increase, because almost no shipping profile perfectly balances shipments across all weights, zones and services.
How then, do you know what to expect? Most companies don’t make useful projections because they lack the time and expertise to accurately assess how the rates will affect them. It can be done, but here is what it takes to do it yourself: First, look at your actual, historic shipments and assess how that will change in the coming year to create a projected shipping profile. Then, create a rate sheet by applying your discounts to the 2012 list rate schedule. This alone is onerous—FedEx’s rate increase schedule is 69 pages, and UPS has three separate sets of published list rates. Now, factor how those rates will affect your company’s profile. Finally, scour the rate schedule for additional surcharges and fees that may apply to some or all of your shipments, then figure those in where appropriate. Make sure you don’t assume your GRI cap—if you have one—isn’t applied to anything it shouldn’t be! Sound complicated? It is, which is why so many companies fail to budget properly.
A third-party shipping consultant can do an independent study to show you exactly what an increase in shipping rates will mean to your bottom line.
There is an easy solution, however, one which may reap benefits beyond keeping your shipping manager from tearing out her hair. A third-party shipping consultant can do an independent study to show you exactly what the increase will mean to your bottom line. They will take a detailed sampling at the package level, re-rate each package against the carrier’s published increases, and provide you with an accurate and usable assessment of the increase you will see. What’s more, these experts have the tools and expertise to examine the details of your contract and help you make sure you are getting the best rates possible for your business. And in most cases, the price of this expert advice will come out of the savings you reap, so you won’t pay anything for it.
Thus, if an expert shipping consultant can do the job better, faster and for free, why is your company still trying to handle shipping contracts alone?
Gina Manis-Anderson, owner of Savii Group, uses her cost-savings expertise to help companies flourish. Learn more about shipping analysis and other spend management solutions at www.saviigroup.com.