How Correctly Budgeting Your Supply Chain Can Increase Your Sales In 2016

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We’re pretty sure you don’t need a reminder, but 2016 is just a few days away. Businesses are focused on getting all of their transportation and supply chain budgeting ready for the New Year. This can be a big issue for customers who don’t have a managed transportation program and lack the business intelligence needed to accurately forecast their freight spend.

Businesses can compute their freight spend with simple math if KPI’s (Key Performance Indicators) are in place, such as freight as a % of sale. An example of how this would be determined is shown below:

“A business forecasts freight is 10% of sell cost and forecasts to sell $10M, so they found the freight costs to be $1M.”

That is just step one of the overall potential freight spend picture. Taking an additional step with a transportation and supply chain expert like BlueGrace Logistics could help reduce those freight costs by 10-15%, and reduce manual processes that increase OPEX (Operating Expense).

Let’s break down a scenario based on a conservative 5% savings on the $1M spend:

  1. BlueGrace benchmarks this savings and reports status on it in quarterly business reviews.
  1. The 5% savings totals $50k.
  1. $50k is the salary of a new employee the business has just saved.
  1. Now the business has the ability to redeploy that salary into other parts of the business, such as sales.

Any way that these profits are distributed will position a business to be more successful in the year ahead. With increased opportunities, you ultimately end up with higher sales numbers.

Bringing a 3PL into the fold while the market is ripe for hard cost freight savings allows businesses to make their company more profitable. Businesses can apply that savings to the sales force and focus more on what’s important: increasing sales in 2016. Opportunities for growth are now available whether it’s creating new sales roles, redeploying the savings into bonuses, or covering trade show fees. Any way that these profits are distributed will position a business to be more successful in the year ahead. With increased opportunities, you ultimately end up with higher sales numbers.

A transportation partner relationship should feel like a true partnership and extension of the business. If that’s not the case, reach out to us today! Our team at BlueGrace will be happy to assess your needs.

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