Supplier Paid Premium Freight - How to get this information from suppliers?



Any suggestions on how to get this information from suppliers? Our corporate office and an outside service track our plant's premium freight, but short of requiring all of our suppliers to notify us if they pay premium freight, we have no other way of doing this. Doesn't this rely heavily on the supplier remembering to contact us if they do get in this situation?


Fully vaccinated are you?
This is an oldie, but does anyone have any contemporary thoughts on this one?

Wes Bucey

Prophet of Profit
Marc said:
This is an oldie, but does anyone have any contemporary thoughts on this one?
My customers cured US of getting into a premium freight situation by including contract clauses which ONLY allowed payment for lowest cost land freight UNLESS delivery earlier than scheduled was requested by customer, in which case they paid premium freight over and above what land freight would have been PLUS special handling charges to our company (sauce for the goose . . . .)

If we ran late, premium freight to meet delivery date was on us (alternate - take "dings" for late shipments which could endanger current and new contracts.)

Anybody handle the situation differently?


I understand your presentation but the requirement is to record premium freight regardless of who incurs the cost. The theory is that even in the case of the supplier accepting all the charges, the cost of that premium will be included in the suppliers cost of doing business which will ultimately effect the price charged. There is a potential for hidden cost which the requirement seeks to identify and use in cost analysis.

Having said that, the requirement is to have a method to monitor the supplier performance. Because records of premium freight are mentioned in the following sentence, it is assumed premium freight is to be included in the monitoring method when applicable. As collection of these records is not specifically required (only retention of records), it is inferred that only KNOWN records are included. In other words, when the supplier provides you with this information, you are required to have records and to use them in the monitoring system. There is no requirement for you to hound a supplier for premium freight costs paid by the supplier. If you don't know about them, you don't have to keep a record of them. There may be reasons why you SHOULD know about them but that is business common sense and we are only talking about requirements at the moment.
It should go without saying, if the supplier incurred premium freight is charged back to you, this is a completely different kettle of fish and the costs should obviously be recorded, tracked, analyzed, reduced and whatever else you do when you are overcharged.


Wes Bucey

Prophet of Profit
I guess I really resent the intrusion of a customer who looks at MY costs and determines what I should shave. I resent it as much as a customer who wants to limit my percentage of profit.

I say, let the marketplace decide. There is no automotive OEM out there who gives a car buyer a look at his costs and allows the customer to say, "You paid a premium for using XYZ freight to transport my car and you should take back some of that charge." The customer's choice is to shop around for the best deal he can get with limited info.

Therefore, if any customer were to intrude in my finances as his supplier (what if I pay too high an interest on my inventory holding costs so I can assure on-time delivery at regular freight?), he had better be prepared to demonstrate how and why he gives similar visibility to HIS customer.

"Sauce for the goose . . . ."
Top Bottom