FREIGHT EXPENSES

Reduction of Freight Expenses in Car Retail Company

Executive Summary

Classic Industries is one of the major U.S automotive parts reseller. Currently the company is facing excessive freight cost expenses and is unable to identify how to reduce them. The paper highlights the issues related to freight cost which are prevalent in the retail and distribution sector keeping in view the example of classic industries. The research identifies the problem areas including the high cargo and inventory cost that add up to the freight expenses. Since the nature of the research is descriptive and it is important to identify other significant factors that increase the cost, therefore, qualitative method is used. The views in the form of the survey questionnaire will be undertaken. This data will be analyzed by the coding the responses of the target sample and analyzing the data using statistical analysis. According to the pre data analysis, it is suggested generally that the Warehouse needs to use TQM and train their stuff how to properly pack and measure boxes; call center needs to give correct rates to the customer, and freight analyst's needs to check on bills coming from freight companies for any over charges. All these steps could bring the freight costs down proving higher revenues to classic industries.

Problem Statement

I am currently employed with a company called Classic Industries, that manufactures and resale parts for classic automobiles. Classic Industries have seven car lines such as Mopar, Camaro, Chevrolet, Chevrolet Truck, Firebird, Ford and Impala. Classis industries stayed in a business for the last forty years and grew from two people small auto parts store in Palm Springs, CA into strong medium size business with 200 employees and head quarters in Huntington Beach, CA. This company had good stable growth during past four decades and, per general manager Mark Bolt, Classic Industries did not get affected by the economic crisis of the past years. Classis Industries have high volume of sales that increased three times during past two years after new lines of Chevy truck and Ford were implemented. Daily, Classic industries sends out up to 5000 packages via ground and air transportation. Main Transportation Company that my company uses is UPS. UPS has about 80% of our freight business. With increased sales - demand on transportation increased as well, this year Classic Industries ships out 2, 5 times packages more compare to the previous year. Freight margin reports show that currently Classic Industries lose money on freight. Basic freight system is that the customer gets charged for freight before actual package is shipped and for unknown reasons, lately, customers get charged less than the actual shipping bill will be later coming to my company from UPS. The whole office is involved in this project. Cycle starts in call center/internet that takes an order and passes to the warehouse, which is packing and sending out packages to UPS and finishes with UPS Company who receives and scans packages and determine the final ...