Monitoring Premium Freight Charges

Hi

Need help how to solve my problem on the premium freight charges.

In our organization, we do monitor premium freight but it only involved supplier. What I understand we also need to monitor premium freight if affect the customer such as premium charges incurred due to delivery.

Let say the delivery should be in February 10 with quantity 10,000. But we are unable to deliver the amount in February 10 with quantity 10,000. We only delivery 8,000 in February 10. 3 days later the balance of 10,000 ie 2,000 was deliver to customer. The extra charges that incurred only to transpoter (like schenker) coz we need them to come our company to loading the parts 2 times instead of 1 times.

Do we need to monitor those charges?

Customer has approved the balance of 2,000 can be send 3 days after February 10. The delay does not affect the customer to make decision to stop their production.

Can anyone help me on this issue.

Thanks.

My belief based on the information you provided would be to track the cost of the additional truck as a premium charge. Even though it did not affect your customer with a production stop, there is definately an added cost to your Company. If you can track this and implement CA to fix the problem (ie. improve scheduling to have banks on the floor, get better forcasting from Customer etc.) then you will make an improvement to your companies bottom line.

Use the metric not only to protect the Customer but also to help your Company.

I couldn't agree more with Jrich. Monitoring these freight charges will allow you to document extra costs, possibly unnecessary costs, and take the initiative to correct this problem/eliminate these costs.

Seems too often we fall into the trap of "is it required"...what I would ask instead, is, does this add value or potential improvement?

I'd say, certainly track these costs and document them, investigate why the company is not meeting delivery contracts, and if the client is fine with a 3 day delay of shipment is there a real reason to add the cost of a second shipment so that you can partially meet the contract delivery date rather than sending the product all at once? Is this a rare occurance or common? There are many questions you can ask in conjunction with this, and those questions may lead you to a quality added solution, so why not follow up on them.

Maz, walau pun there no distruptions to customer production line but your organization has incurr additonal tarnsport charges...so that's where u have to record the premium freight... biasanya satu trip katakan RM100.00 tapi sekarang dah 2 trips. Jadi dua kali ganda the amount = RM200.00 for the 10,000 items to be delivered..