Attention manufacturers, OEM’s, and retailers, you can work together to reduce the cost of transporting returned goods from the retailer to the manufacturer simply by working together. Most retailers do a lot more business with carriers than do their suppliers, manufacturers, and OEM’s. As a result, retailers are able to negotiate better LTL, Truckload, and small package rates.
However, many times when it comes to who pays transportation bills for goods moving from the retailer to the manufacturer in the reverse logistics pipeline, the manufacturer end up paying the carrier directly, at a higher rate. This is often the default assumption, but it doesn’t have to be.
If you are a supplier or OEM that does this, I have a great tip for you. Go to your retail customer and ask them to pay for shipping and bill you. Of course you will want to see what their transportation rates will be, but for the vast majority of suppliers, they will see a significant savings.
Savvy manufacturers often encourage their retail customers to work with them on this by agreeing on a mark up on the rates paid by the retailer, which is still lower than they would pay with their rates. With this arrangement the retailers make the spread between what they pay the carrier and what they bill their supplier. This also helps by providing the retailer more volume with their favorite carriers that the retailer can leverage to get better rates in the future on all their freight. The manufacturers saves big because they can dramatically reduce their transportation costs on returns by using the retailers rates which will be much better than what they can typically get from their carriers.