Supply Chain Budgeting Tips For The Small Business
For small businesses, supply chain costs can quickly eat into profit margins. Whether you ship products to a warehouse, a retail store, or directly to a customer, freight expenses are a major part of your monthly budget.
The biggest threat to a shipping budget is a surprise fee. When freight is classed incorrectly, or extra delivery services are not planned for, shipping costs rise. The good news is that taking control of your supply chain budget is easier than you think. By making a few smart changes to how you pack, quote, and book your shipments, you can keep your finances on track. Here are practical supply chain budgeting tips to help your business manage freight costs.
Be Flexible with Your Budget
We don’t mean to throw caution to the wind and be so flexible that there’s really no budget at all. What we mean is to look at the budget you had last year and the data about what you spent the most on, unexpected expenses that came up, and any other important budgetary items from the previous year. Then take that information and build your new budget to be a range so that you can adjust accordingly should things change positively or negatively.
You’ll know where in your budget range you can afford to spend a little more and where you can make some cuts. This will help you make sure your most valuable resources have the support they need to have the best business outcomes. Also, make sure you include your budget details in your business continuity plan so everyone is on the same page.
Confirm Your Freight Dimensions, Freight Weight, and Plan for Extra Delivery Services
The most common way small businesses blow their supply chain budget is through freight billing adjustments. Carriers reweigh and remeasure shipments at their terminals. If the weight or dimensions on your Bill of Lading do not match the actual freight, the carrier will issue a billing adjustment. To keep your budget accurate, always weigh your fully packaged pallets. Measure the length, width, and height to the highest point. Accurate measurements upfront mean accurate freight bills later.
When building your budget, you must account for the physical requirements of your pickup and delivery locations. Standard freight delivery assumes there is a commercial loading dock. If your business or your customer does not have a dock, you will need a liftgate to get the freight off the truck. If you are delivering to a home, you must pay a residential delivery fee. These are called accessorial charges. Selecting these services when you get your initial quote helps you budget accurately and prevents surprise bills.
Consolidate Smaller Shipments
Sending multiple small shipments every week is an easy way to drain your supply chain budget. Instead, look for ways to group orders together. Less-Than-Truckload (LTL) shipping allows you to share trailer space with other shippers. You only pay for the space your freight takes up. Consolidating your smaller packages into a single LTL pallet may help reduce costs and improve your overall supply chain efficiency.
Evaluate Business Processes
If the sales mantra is “always be closing,” then the small business owners’ mantra should be “always be evaluating.” When you can evaluate your business processes, you will be able to see where things are running smoothly and where things need improvement. As you build your budget, you can allocate funds appropriately based on how business processes are working (or not working).
You also want to consider what items are most popular, so you can put resources toward keeping those items stocked and ready to be shipped. Ask yourself questions about your shipping process.
–Do I have the right packaging materials on hand for my most popular items?
–Will it be easier and more affordable to consolidate my freight?
–Will expedited freight help me meet my deadlines?
–Does my shipment require special shipping services?
You will want to factor in all these questions in your budget, too. Poor packaging leads to damage and missed pickups, which can wreak havoc on your budget. Capacity could be too hard to find unless you consolidate shipments. Poor weather could lead to delays. Any additional services performed by a carrier outside of curbside pickup and delivery are an additional charge. Planning for these services ahead of time ensures that your freight gets the care it requires and your budget doesn’t take a hit.
Compare Carrier Rates All In One Place
Relying on a single carrier for every shipment rarely gives you the best price. Carrier pricing changes based on their current capacity and preferred shipping lanes. To stretch your budget, you need to compare rates from multiple providers. FreightCenter helps shippers compare freight rates from a wide network of carriers. Our platform helps find cost-effective options based on available carrier routes and pricing, saving you the time of calling carriers one by one.
You’ll want to be sure that your business processes are working and that you’re shipping your products, meeting your customers’ expectations, and making money in the process.
FreightCenter is always here to assist you with your shipping needs. Get a quote or give us a call.
