Three important tips that will save you money.
TIP #1-CHECK YOUR FREIGHT BILLS!: During an operations audit of a major furniture retailer, I recently noted serious problems in their review of prepaid and add freight charges from vendors. In one dramatic instance, they corrected a $30 error price variance on six chairs but missed a $200 error on the vendor's charge for delivering on his own truck. The reason I'm mentioning it now is because this situation pops up in almost every review: People pay attention to the merchandise price and ignore the freight, thus losing profit margin. Is this the case in your stores?
If you don't do anything else, look at all freight charges for a reality check. Are the charges reasonable for the amount of merchandise handled? How do they compare to previous shipments or from other vendors in the same area? If in doubt, start asking questions. Another simple check is to count the number of corrections made to freight bills and to the prepaid freight charges on product invoices. Too many retailers pay freight charges as presented even though five out of every one hundred invoices have errors. If you spend $100,000 annually on freight, a minimal review will save about $5,000 and a thorough review of routing options can add $20,000 to the bottom line.
TIP #2-DO YOUR DELIVERY TRUCKS... HELP OR HURT YOUR IMAGE?: Every time your delivery trucks are on the road, they present a powerful advertising image, but is yours positive or does it turn off customers? Delivery trucks don't have to be new, but they should look good. In fact, old trucks that are properly maintained can present a powerful advertising image. You can boast... that by keeping your trucks in good shape, you can offer better prices. UPS has done that for years.
On the other hand, you have seen smoking delivery trucks with twisted bumpers, rust spots, banged up corners, and pop bottles and empty fast food wrappers all over the dash. The drivers will carry that attitude into the customer's home when they make the delivery, forgetting to wipe their feet, and failing to do the final wipedown to remove any handprints or dust from the transport.
If a helper is on the truck, insist that the helper get out of the truck and guide the driver as he backs into a driveway. Failure to follow this cardinal rule results in many retailers having to pay for new mailboxes and landscapers to replace damaged shrubs and lawns. Drivers working alone must do their own planning and use their mirrors effectively.
TIP #3-IS YOUR WAREHOUSE BIG ENOUGH?: After reading our article last fall about using warehouse space effectively, a furniture retailer did a thorough review of his primary 7,000 square foot storage area where most product was bulk stored on the floor. By purchasing used cantilever furniture racks and an order picker, he will have almost 12,000 square feet of useable shelf space on four levels. Damage will be reduced and the space gained allows him to move out of a rented warehouse two miles away. The savings in rent will pay for the rack and order picker in about a year. He also will reap the added bonus never having to run back and forth between warehouses and has eliminated problems associated with running outside warehouses.
Daniel Bolger, P.E. provides warehousing, transportation and logistics consulting to clients throughout the USA. Questions about this and other articles by contributing editor Dan Bolger can be directed to FURNITURE WORLD at firstname.lastname@example.org.