Results for our Client:
- Developed Landed Freight Program to radically reduce dealer shipping costs
- Create incentive for dealers to order more per shipment
- Harmonize manufacture/dealer relationship and avoid conflict and waste
Our client, a major furniture manufacturer, was facing a dealer customer rebellion. Constant complaints were flowing in from unhappy
dealers who criticized inconsistencies in per unit freight charges.
Our client took the initial step of investigating these complaints to try and find out the source of the problem. After review, our client
concluded that the root problem had to do with a discrepancy between quoted freight rates and exact billing, as described below.
In a nutshell: when dealers ordered product, they were quoted a flat rate for an entire shipment. For example, if an entire truckload of product
was ordered, then freight costs were quoted as $10/unit. However, this quoted freight cost would only be in effect if an entire truckload were
shipped in one order. In many cases, manufacturing plants simply didn't have a truckload of inventory on hand, or couldn't produce enough
new product by the shipping date. As a result, shipments for the same dealer order were spread out over several shipments. As can be easily
imagined, this completely removed any "volume discount" shipping that our client (the manufacturer) was receiving from service providers. Thus,
when the manufacturing plants received a higher shipping bill - for example, at $20/unit or even $50/unit - that added freight cost
was passed down to the dealer.
And as if this wasn't bad enough, if the dealer had to move production to a different manufacturing plant, the costs were astronomical!
It was a very messy and extremely costly situation that needed to be solved yesterday!
The ICC Solution:
ICC came to the rescue fast and efficiently, because each day was bringing additional dealer complaints and adding up to the growing tally
of wasted money.
We quickly developed a Landed Freight Program for all dealer shipments from each of our client's manufacturing facilities. The program took
into account the number of units ordered by the dealer, and also took into account the number of units the plants were able to ship. The program
compared these two numbers, and gave the dealer the lower cost. In other words, the dealer was never "penalized" if a plant was unable to
ship out the full order. This solution immediately started saving money, and was received eagerly by grateful dealers.
In addition, and as an exceptional value add, the ICC solution provided dealers with an incentive to buy large quantities of goods from our client.
Since dealers no longer had to fear astronomical and unpredictable freight costs, they securely ordered at the maximum level. This led to more
client orders, more often!
Thanks to this incredibly effective solution, our client and its dealers now enjoy a standard freight cost per unit for all order quantities.
Furthermore, dealers can now accurately budget for freight costs over the short, medium, and long term.