The clearest possible image of a company’s supply chain takes thousands of data points into account. It’s easy enough for company leaders to recite what they ship and where it goes. But leaders who can harness all that data to discover trends and inefficiencies are those who can confidently propose money-saving solutions.
Reveel specializes in helping leaders understand those trends and prepare for negotiations with their carriers. And our experts get results, routinely helping companies cut their shipping spend by 15 to 20 percent.
Two recent Reveel clients worked with our team to explore their existing contracts, negotiate better ones, and then continue to monitor their shipping spending closely. Here’s how they did it.
1. Start by Understanding Your Baseline
When Nixon divested from its parent company, surf-and-sun clothing brand Billabong, they needed to negotiate new contracts with their former parent’s carrier. UPS told Nixon’s leaders that since they were much smaller than Billabong had been, they couldn’t match the rates they’d given Billabong.
Reveel worked with Nixon’s executives to prepare for negotiations with UPS. They used Billabong’s pricing as a baseline, then incorporated data about Nixon’s unique needs, including shipping volumes, into their desired contract.
Few companies have such a clear sense of what their shipping rates should be. Reveel’s team, with long careers in the shipping industry, can help them understand what their baseline should be based on their products and regional needs.
For example, executives at auto parts manufacturer KC HiLiTES knew their existing contract — their baseline — was too expensive, but they weren’t sure what a fairer rate would be.
What they didn’t know was that their business was their carrier’s largest account in their rural region outside Flagstaff, Arizona. Reveel’s industry experts helped executives understand their contract in that context, offering a new frame for their upcoming negotiations.
2. Data is Key in Contract Negotiations
Once executives understand their existing contracts, they can leverage their data to target certain areas of those contracts for savings. For example, Nixon manufactures watches and accessories, while their parent Billabong produced a range of clothing and surf products.
By understanding exactly how their shipping volumes differed from their parent’s and focusing on areas within the carrier contract that were specific to their needs and product type, Nixon’s actually negotiated a contract whose carrier costs beat Billabong’s.
In the case of KC HiLiTES, a decades-long relationship with FedEx and UPS meant that executives and their carriers both knew the company’s needs well. What changed the game for KC HiLiTES was industry data about the region from which they shipped.
Reveel’s industry knowledge helped executives realize that their account, based about 35 miles outside Flagstaff, was not a disadvantage. Carriers had to deliver packages to homes and small businesses in their area. KC HiLiTES’ comparatively large account was extremely valuable to those carriers. Armed with knowledge of the relevant industry data, executives were well positioned to negotiate a new contract.
3. Negotiating a New Contract is Just the Beginning
Nixon’s leaders saved the company 19 percent on shipping when they negotiated their new post-Billabong contract. KC HiLiTES’s team cut their shipping spend by 18 percent after understanding what made their contract so expensive and positioning that as an advantage.
Those are incredible successes — but they’re not finished.
Next, companies must ensure their carriers are complying with their new contracts. That requires reviewing every invoice to make sure rates and fees are correct and that every package was delivered on time. Few companies have the resources to do that in detail. Again, that’s where data comes in.
Reveel’s reporting and analytics tools provide real-time data, like average cost per shipment, to give company leaders visibility into their operations. They also audit invoices and find errors that can be worth thousands of dollars — for example, if packages were delivered a few hours late, the carrier may have contractually agreed to waive or reduce fees on those shipments. Without careful audits, companies might leave those rebates on the table.
Reveel’s industry experts can help companies negotiate better shipping contracts, from start to finish. By helping leaders leverage internal data and lifting the veil on industry information, our team is ready to help your company succeed — just like we did with Nixon and KC HiLiTES.