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“Last mile” in supply chain management is a product’s last step of the delivery process from a warehouse to the customer.
It’s how and when a package finally arrives at a shoppers’ door. In addition to being a key to customer satisfaction, last-mile delivery is also the most expensive part of the process. Customers are only willing to pay less than 2%* of that last-mile delivery cost. So, what does that mean for the seller? They are obviously left to absorb the remainder of that cost. This may be necessary in order to retain customers, but there is a way to lower your overall shipping expenses. Working with a shipping consultant for optimal parcel contract negotiations will guarantee you a review of your shipping profile and likely find savings to implement on your current carrier agreement.
Parcel contract negotiation can be complicated, but the payoff is well worth it. Before you attempt to delve into this realm, there are a few things that need to be thought through. Understanding parcel carriers and their pricing agreement language is critical when it comes to negotiating. Being fully prepared, knowing what you want, and what’s possible will give you the leverage you need to begin bargaining with parcel carriers.
Below are tips to help you take control of your shipping spend through parcel contract negotiation.
Begin with understanding your goals, needs, and current costs. If you have an existing contract, the first step is to examine the agreement.
Carriers rely on shippers becoming too reliant on them. Keeping carriers on their toes by having an alternative option for getting packages delivered is smart business.
Approaching your parcel contract negotiation requires a delicate balance of confidence, knowledge, and diplomacy. The way you approach it will have lasting effects on your relationship with your carrier.
We all want to get the best possible price on any product or service. And, like any negotiation, you need to be prepared with insight to maintain a firm negotiating position and understand carrier negotiating tactics. Prepare yourself for parcel contract negotiations or re-negotiations by doing your research, knowing what you need, and knowing what’s possible. With the right negotiating team that has the tools and knowledge, you’ll be prepared to optimize your carrier contracts, lower shipping spend and increase profits.
*According to Statista