In business today there are plenty of “Managers.” In transportation we often cross paths with both the Purchasing Manager and the Transportation Manager. In organizations where they both exist, they can typically be at odds not even realize it. The Purchasing Manager is concerned with buying better (i.e. lower) costs in all areas of the business while the Transportation Manager is concerned with buying better in transportation alone.
Here is a realistic example of a conflict, in order of events:
- The Purchasing Manager goes to market and procures a conveyer belt needed to fix a machine as soon as possible.
- The Transportation Manager sees the order pop up in the ERP system and tenders the shipment to a low cost carrier, with an extended transit time and poor service record.
- The shipment is supposed to picked up on a Monday, and gets picked up on a Wednesday.
- The shipment is now in extended transit time.
- By the time the conveyer belt is delivered and installed, the conveyer line has been down for two days and the business division is upset at the Purchasing Manager.
- The Purchasing Manager blames the Transportation Manager and that is where we have our conflict.
Now let’s think about the concept of total landed cost.
This is the cost of goods sold + the transportation cost + the cost of lost production resulting from the conveyer line being down. That total landed cost is much more than the cost of a conveyer belt or even the cost of freight on a single shipment. Now both sides, Purchasing and Transportation, need to pay closer attention.
BlueGrace works in consultation with all aspects of our prospective clients to make sure everyones interests are in line, showing value to the entire organization from the Purchasing Manager to the Transportation Manager.
Think of how powerful it could be if your 3PL Partner provided you total landed costs of product groups. That would give your business the power to decide on the future of that product! This is what a true 3PL Partner should be helping you do. Please reach out today for more information.