Parcel - April 2008 - (Page 16)

NEGOTIATIONS HAVE NO FINISH LINE… But you can simplify this ongoing process any companies view carrier rate negotiations as having a deﬁnite starting and ending point that revolves around the expiration date of their current contract. It usually starts a few months before the contract expires and is accompanied by a feeling of dread and thoughts of “here we go again.” It carries a sense of relief at the end, which is culminated by the signing of a new contract. While it is true that the activity and focus are much higher around the contract expiration date, it can be very costly to limit your view of this process to that time before and after the contract expires. The carriers do not make the same mistake. Think about it: All year long, you have been bombarded with messages from the carriers, and these messages have done a fantastic job of educating you on all the pressures they experience in the area of cost. You hear about rising fuel costs, adverse legislation, court rulings and new labor contracts throughout the year. Every time you hear these messages from the carriers, they are positioning themselves with you so that you know what to expect when your contract runs out. This “positioning” includes three very speciﬁc messages they want you to know. One, there are upward cost pressures that are beyond their control; two, their business is particularly sensitive to these costs; and three, and most importantly, they need relief! They are already negotiating with you, and the reality is that they have been negotiating with you all along; you are already at a disadvantage. But the good news is that there are a few simple steps you can employ to reverse this position with your carriers. After all, aren’t these the same three things you would like the carrier to know about you? First, recognize that you need to maintain consistent communication with your carrier representative — consistent 16 Spring 2008 M By Scott Knight both in frequency and message. Obviously, the difﬁcult aspect is having something signiﬁcant to communicate, so let’s start with something that everyone has access to: a customer experience. Every time you have to deal with a customer who is upset because they did not get their shipment on time, document it so you can share it with your carrier representative. If possible, demonstrate the cost of making it right with that customer so the carrier can see how their performance impacts your company ﬁnancially. While this may seem oversimplistic, it serves to create a tangible link in the representative’s mind between their performance and your ability to serve your customer at a low cost. If you only do this one thing, but you do it monthly, you will have communicated to the carrier 24 times (for a two-year contract) how their performance failures have driven up your cost. Second, turn percentages into customers. When the carrier tells you that they were 98% effective, help them understand what that means to your customers. To the carrier, 98% may be something they want to brag about, but to you, it means that one out of every 50 packages shipped was late. Add in a few multi-piece shipments and all of a sudden, one out of every 30 of your customers is being let down by the carrier. Over time, this consistent message helps to communicate that the carrier is creating costs outside of your control, and your business is sensitive to these costs. Third, and most importantly, ask for relief. You might be surprised at how this simple process can change the carrier’s stance toward lowering your cost now that you have countered their position. The companies that do this best are the ones who have complete carrier scorecards, which should be your ﬁnal goal. Until then, start with this simple change in the way you structure your communications, and watch the positive change it brings. Scott Knight is President and CEO of Sunago Systems Group. Email him at scottk@sunagosystems.com, call him at 503-558-1903 or visit www.sunagosystems.com. ■ www.PARCELindustry.com http://www.sunagosystems.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - April 2008

PARCEL - April 2008 Contents Editor's Note Moving Forward Recycling for Safety’s Sake Want Some Good News? Negotiations Have No Finish Line... Lowering your Parcel Shipping Costs Meeting Industry Challenges New Pricing, New Opportunities Time to Track It’s Scan-tastic! 10 Recycling Facts The New USPS Law Changes New Law, New Opportunities for Package Shippers A Diamond in the Rough Seven Shipping Trends for 2010 ...and Beyond The Move Update Changes A Simple Shipping Solution A Case Study in Efficiency New Products and Services Industry News Advertiser Index

Parcel - April 2008

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