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Freight cost management: definition & important aspects for buyers

The professional management of freight costs is becoming a decisive success factor for companies in the face of rising transportation prices and complex supply chains. This structured overview shows how purchasing can tap into considerable savings potential through systematic analysis and optimization of transport costs.

Freight cost management in a nutshell:

Freight cost management comprises the systematic planning, control and optimization of all transport and shipping costs in the supply chain. For purchasing, this is an important lever for reducing costs, as freight costs often account for 5-15% of total procurement costs.

Example: A medium-sized company reduces its annual freight costs by 18% from 240,000 euros to 196,800 euros by consolidating deliveries from three to two deliveries per week and renegotiating transport contracts.

Contents

Freight cost management is a key success factor for companies in today's globalized business world. It comprises the systematic planning, control and optimization of all transport-related costs along the entire supply chain. In view of rising transportation costs, increasingly complex supply networks and growing sustainability requirements, the professional management of freight costs is becoming more and more important. In this guide, you will learn how you can identify potential savings, optimize processes and sustainably strengthen your company's competitiveness through effective freight cost management.

What is freight cost management?

Freight cost management refers to the strategic planning, management and control of all costs associated with the transportation of goods. The aim is to optimize these costs, create transparency and at the same time ensure high delivery quality. This includes the analysis of freight rates, the selection of cost-efficient transportation routes and means as well as negotiation management with logistics service providers.

Core elements of freight cost management

  • Freight cost analysis: Detailed evaluation of transportation costs incurred by route, mode of transport and supplier.
  • Contract management: Negotiation and management of contracts with carriers and logistics partners for optimal conditions.
  • Route and network optimization: planning efficient transport routes to minimize costs and delivery times.
  • Use of technology: Use of transportation management systems (TMS) for real-time tracking and data analysis.
  • Significance for purchasing

    In purchasing, effective freight cost management makes a significant contribution to reducing overall costs and increasing competitiveness. By optimizing transport costs, companies can achieve considerable savings and improve their margins. It also enables better planning, reduces risks in the supply chain and strengthens relationships with logistics service providers.

  • Cost savings: Identify and reduce unnecessary expenses in the transportation process.
  • Efficient supply chains: Improving delivery reliability through optimized transport planning.
  • Strategic decisions: Data-based approaches enable well-founded decisions in purchasing.
  • Guide: Strategic freight cost management for optimized logistics processes

    Freight cost management: from manual control to digital optimization

    Building on the importance of freight cost management as a tool for reducing transportation costs and increasing supply chain transparency, there is a constant change in practice. Traditional manual processing is increasingly giving way to modern, digital methods. This change is necessary in order to meet the increasing demands for efficiency, accuracy and real-time information.

    Old: Manual freight cost control

    Traditional approach: In traditional practice, freight costs were managed manually. Freight invoices were checked individually and compared with paper contracts or simple Excel spreadsheets. Process costs with transportation service providers were handled by phone or email, which was time-consuming. A lack of standardization led to errors in data entry and made it difficult to analyze freight costs accurately. In addition, delays in invoice verification were common, which could lead to late payments and disrupted supplier relationships.

    New: Digital Freight Audit and Payment

    Freight Audit and Payment: The modern approach relies on digital solutions and process costs. Specialized software enables automated auditing of freight invoices based on stored contracts and tariff data. Real-time data integration ensures transparency along the entire supply chain. Machine learning enables anomalies and potential savings to be identified more quickly. Electronic data transmission accelerates the flow of information between companies and carriers. This leads to a reduction in process costs of up to 30% and significantly improves the accuracy of freight cost accounting.

    Practical example: Increasing efficiency in the consumer goods industry

    A large consumer goods manufacturer implemented a digital freight audit and payment system. Within the first year, the company was able to reduce its freight costs by 12%. Automated invoice verification reduced manual effort by 70%, freeing up staff for more strategic tasks. The transparency of freight costs made it possible to identify and optimize inefficient routes. In addition, the relationship with transport service providers improved thanks to faster and error-free invoicing processes.

    Conclusion on freight cost management

    Freight cost management is an essential component of successful corporate management and offers considerable savings potential. Through systematic analysis, digital solutions and strategic partnerships with logistics service providers, companies can significantly optimize their transport costs. Success lies in the balance between cost savings and service quality, supported by data-based decisions and future-oriented technologies. Continuous adaptation to market changes and new technological possibilities is essential for sustainable freight cost management.

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