You should work more often in the lunch room, that´s where you hear about other people’s ideas and challenges. Today for example I talked with my colleague, who works with sales, about logistics cost control and her need to make rough estimates on potential savings. She requested a method for making a quick health check on logistics costs and how much in control the potential customers are.
It is complicated to set up a business case and it takes time if it is to be done properly. The challenge has two sides; it´s hard to do calculations on something when you lack data and control, and additionally a business case is often built on assumptions that you very much like to verify. In the latter part Primelog can contribute by bringing in experiences from our existing customers.
So, what we want is a quick way to get the pay-back time for an investment in system support for invoice audit and analysis of logistics costs. Below is a tabloid-style quick test that gives you an indication, without any scientific evidence, if you are in the driver´s seat or not!
1. What is you company’s annual logistics spend?
a. More than 50 MEUR (20p)
b. 30-50 MEUR (15 p)
c. 10-30 MEUR (10p)
d. 3-10 MEUR (5p)
2. Are you already today controlling freight invoices on shipment level?
a. No (15p)
b. Yes, sporadically manual checks (5p)
c. Yes, all shipments are manually checked (0p)
d. Yes, all shipments are automatically checked (0p)
3. If you already control freight invoices on shipment level manually,
how many resources are needed?
a. 0-0,5 FTE's (5p)
b. 0,5-2 FTE's (10)
c. 2-5 FTE's (15p)
4. What capabilities regarding freight cost analysis and decision
support does your company have?
a. We can follow up costs on shipment level for all carriers and allocate per order,
order line, customer and business unit etc. (0p)
b. We can follow up costs on invoice level per carrier. (5p)
c. No possibilities for follow-up exept from the accounting system. (10p)
a. We book our transports through a booking system via EDI (0p)
b. We only provide the carrier with a manual waybill (5p)
6. Carrier customer number
a. Do you book all your transports on the same customer number? (5p)
b. Our suppliers have separate customer numbers if they book freights that we should pay. (0p)
7. Transport tendering
a. All out business units will tender their transports upon demand. (5p)
b. Regular tenders are done centrally (0p)
c. We lack statistics and data to use in the tendering process. (5p)
40-60 points indicate a pay-back time of less than 1 year, 30-40 points=1-3 years, 20-30 points=3-5 years.
Questions and answers are formulated to relate to empirical savings achieved by Primelogs' customers through implementing the cost control package, an average cost for implementation project and license fee has been used.
As mentioned above this test is far from scientific, but on the other hand the purpose is to give an indication – and a quick health check!