General Rate Increase or GRI, is the average amount by which a tariff rate increases, which is applied to your company’s base freight rate. GRIs can occur multiple times throughout the year and it likely you have already experienced rate increases. Although each GRI may have a small impact on your overall logistics costs, over time they can quickly add up. As a result, GTS recommends revisiting your freight rates periodically throughout the year to ensure you are receiving the value you expect from your vendors. Below are 3 tips to keep in mind while reviewing your current contracts:
1. Review & Assess your Needs
Review the goals you originally created for your current logistics process to ensure they remain relevant with your organization’s current model and overall strategy. This is a great time to revise your current goals depending upon how your business has evolved. Next, consider what baseline tools, services and/or equipment necessary to effectively manage your supply chain? Which of these do you have in-house and which of these do you rely on through a vendor? Make a few lists outlining the tools and services that you can’t live without, a list of everything you currently require to be successful and a ‘dream’ list. While you consider these tools and services, refer back to your goals to ensure that these will support your endeavors.
2. Determine your value
Now that your goals and necessities are clearly outlined, it’s time to look at your freight bills and begin evaluating the value behind your spend. Regardless of which type of vendor you choose, there will always be a minimum cost to ship; however, what benefits are you receiving from your partnership for the amount of money you spend? It’s clear that you can get a freight quote from just about anybody these days, but consider the service you are receiving from your vendor relationship: do you have the necessary tools and services to support your goals? Is your organization self-sufficient and able to work solely online, or do you prefer working with a live routing center? What type of modes do you ship? Do you require reporting? These are just a few questions to consider while viewing your bill.
3. Setting Expectations
Regardless of whether you are working with a carrier direct or a 3pl, you should have the capabilities to quote, execute and track your shipments online. This technology should provide seamless execution and visibility into your shipments. Similarly, your vendor needs to be accountable when complexities arise. Regardless of your situation, it’s important to be able to rely on one another for information and support when needed. It’s also important to discuss the types of modes you ship (including in urgent or complex situations) and match them with the vendor’s modes so there are no surprises in a crunch.
In the end, it’s important to consider the true value of your freight quote. Again, quotes are easy to come by, but the difference between them is the value you receive. Depending upon your needs and goals, a 3PL partnership can meet your needs to support your initiatives.