When making purchasing decisions, purchasing managers and agents have to consider a wide variety of variables. This can make making purchasing decisions very difficult and complicated for these professionals. During the decision-making process, purchasing managers and agents commonly assume that all shipping and handling is value-added. However, oftentimes, this is not the case.

When is Shipping and Handling actually value-added?

Several questions must be asked in order to discover the answer to this question:

• Compared to what you are being charged for S&H, what is the marketing price for the transportation?
• Will the goods arrive at the final destination by the target date?

If the marketing price is too high or if the goods will not make it to the final destination by the target date, then S&H is not value-added.

Investigating Further

In order to further understand the true value of Shipping and Handling, you should ask your supplier another question:

• When orders are will-called to be picked up at your dock, how do you handle S&H?

When asked this question, many suppliers will inform you that there is actually a charge for this. Others say there is no charge. You can understand the true margin when there is no charge by using the GTZ LTL platform to shop in the competitive market. When there is no charge you can save up to 10-50% on will-call orders. However, your shipment routing will determine the margin.

What should you do if FOB Destination is the only choice?

Vendors do say this from time to time. Generally, the reason they give for FOB Destination being the only option is that Shipping and Handling is included in the price. However, vendors often bundle shipping and handling together with product price because this enables them to negotiate prices that are lower-than-market while still being able to generate significant revenue.

Separating Shipping and Handling costs from the product costs would reveal the value of the product. Therefore, they often bundle them together, so you don’t know exactly what the product costs and what Shipping and Handling Costs. You just know the total cost. When these costs are separated, it often reveals inflated shipping costs, which they want to hide!

Can you pay for just the product and not the exorbitant shipping costs?

Yes, you can actually do this, but most purchasing managers do not know how to do it, therefore, they avoid trying to do it. However, if you would like to go this route, then you can work with a representative from GRG. One of our representatives can work with you on a one-on-one basis and teach you how to avoid the high shipping costs. Dodging these costs can help you to put more money into your pockets and not into the pockets of your vendors.

Interested in learning more about this option?

If you are tired of paying inflated shipping costs and want to learn more about reducing them, then feel free to get in touch with us today. We would be happy to help you.