Tales from the Trenches: FedEx First Overnight…Really?!?!

This actually happened at the $1.5B company I worked for.

As part of the logistics management staff, I made it a point to walk through the Shipping & Receiving section on a daily basis.

Although we were not a manufacturing facility, we had a lot of movement with engineering parts, prototypes, exhibition pieces, etc.

At one point, we spent over $3 million in small package services, using both FedEx and UPS.

I have a lot of respect for both FedEx and UPS because they have an extensive network and typically delivered as promised.

My issue is with OUR managers and engineers and staff that use these FedEx and UPS services.

In many instances, they have no sense of the cost of these premium transportation services.

My tale is but one story. Unfortunately, we have seen it recur many times.

One morning, during my walk through the Shipping & Receiving area, I saw the following package delivered to one of our staff:

:

LWL004

When I walked through again at lunch time, these SAME packages were in the Shipping & Receiving area!

Of course, I immediately visited the person responsible for requesting this shipment and asked why the HELL he ordered the package using the “First Overnight” service.

Had he used the “Priority Overnight” service, the package would have arrived by 10:30am and we would have saved 73% over the “First Overnight” service!!

That’s right: the difference in these 2 hours of delivery time can save 73% of the cost.

We paid $168 using the “First Overnight” service.

We could have paid $46 using the “Priority Overnight” service.

Of course, we put programs in place to work with our entire staff to make them aware of these differences and even worked with both FedEx and UPS to remove that service option from the menu options, but the fact is that many people can bypass these safeguards by manually creating the waybill.

In the years since this occurred, we made significant progress in educating our staff, but this is one area for you to look into as it can represent a great savings opportunity.

Good luck!

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About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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