Freight Best Practices

1) Establish clear freight terms and policies

• Common freight term options include:
• Paid – Free Freight; usually factored in to the price of the product and extended as an incentive to purchase
• Add On (or Prepay & Add) – Customer pays for actual or negotiated cost of freight
• Collect – Customer pays carrier for actual or negotiated cost of freig
• Establish an approval process for evaluating each customer and apply terms that reflect the overall pricing strategy for the customer.
• Link sales compensation metrics to selection of each customer’s freight policy (e.g. Add On customers are positive, Paid are negative).

2) Communicate Freight Terms and Policies

• All appropriate employees should have access to each customer specific freight terms

• Terms should be hard-coded into order and shipment systems and transfer directly to invoicing paperwork.

3) Establish a clear policy for managing, and when appropriate, charging for expedited shipments

• Include a process for identifying expedites resulting from internal issues and establish authority levels for such approvals.
• Include a process for providing customer ‘options’ when expedites are a result of customer issues.
• Ensure a closed-loop process for charging customers (when appropriate) for expedited shipments, even if freight is normally “included” or “free”.

4) Measure and Audit your performance

• Set goals and routinely measure performance regarding freight recovery, and
• Identify customer behaviors that routinely place stress on your shipment processes, such as accounts that have repeat occurrences of expedites. Leverage this information in your relationship or pricing management of individual account(s).