The metric of all metrics when it comes to drilling down freight costs is (drum roll please) cost-per-pound! End of article. Thank you! I’ll be signing autographs at the table outside the conference room in five minutes.
All kidding aside, let me further explain about how cost-per-pound is the mother of everything to a well run supply chain. In the transportation world we spend a lot of time on freight class, distance and weight. However, it’s the cost-per-pound that should mean the most to shippers.
When it comes to negotiating freight deals, pricing out products, selecting vendors and evaluating rate increases to customers, nothing is more important than the cost-per-pound.
I tried to pack a lot of good stuff into this article so please be alert.
Why is Cost-Per-Pound So Important?
Cost-per-pound is so vital to any business because it does not lie. I know you were probably looking for more in this paragraph but there is no reason to add any fluff to this statement. Plain and simple, cost-per-pound tells the truth.
How to Find Cost-Per-Pound?
Cost-per-pound is quite easy to extract. Almost every single freight carrier in the industry publishes the weight of the shipments on their freight bills. If the weight is on the bill of lading, it will likely get transferred to the invoice.
Many companies are already key punching freight invoices when they come in or they are pulling the data from reports sent from freight carriers. The key part of analyzing cost-per-pound is getting the data into an Excel spreadsheet. The data needed is shipper and consignee information (company name, city and state), freight class, weight and the freight charge. If using a 3PL, all of the data is usually lump summed and easily downloaded from their website.
There is a ton of stuff that can be done with the cost per pound of freight. But shippers, who also tie in their invoice price for the product, can drill down even further. So if possible, adding another field for product invoice price will just put this project on steroids.