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    Parcel Contract Best Practices

    This Sporting Goods Company Doesn’t Play Around With its New Parcel Contract

    sporting goods case study

    About the Company

    This Midwestern sporting goods company manufactures and distributes sporting goods, archery equipment, indoor and outdoor game supplies, and fitness products through brick-and-mortar and online retailers. The company ships more than 200,000 packages each year, from dart tips that weigh only a few ounces, to game tables that weigh hundreds of pounds. When the company faced excessive fee increases with a new carrier contract, VeriShip contracting experts helped the company save more than $600,000 in annual parcel shipping fees.

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    Though this operations manager has spent decades in warehouse operations and distribution, he fully admits he didn’t know a lot about parcel shipping before becoming operations manager at the distribution center for this Midwestern sporting goods company.

    Before joining the company, his experience was mostly in local and regional distribution of pallets of goods and individual pieces, delivered on dedicated fleet trucks. He has spent most of his career in distribution and warehouse operations for fresh foods, produce, and restaurant supplies.

    When recently evaluating a new contract and General Rate Increase from his carrier, he knew he needed help. The contract as it was presented would likely drive up shipping expenses by more than $400,000 annually.

    The operations manager called VeriShip which has worked with the company on parcel shipping auditing for several years. That’s when he engaged VeriShip’s Contract Engineering analysis and advisory services.

    We’re a public company and the proposed parcel shipping increase could have become a material hit to our financials and our shareholders. But VeriShip was able to take what looked like an impending loss and turn it into an actual annual savings of more than $600,000. It was incredible what they helped us accomplish.

    Operations Manager | Sporting Goods

    Action: Preparation and Practice Before the Big game

    A cursory review and cost projection of the initial contract from their carrier was prepared and passed around the office. It appeared that the company would save about $145,000 annually. 

    “We had a lot of smart people look at this carrier contract carefully, but it’s very difficult to understand the complexity, terms and conditions,” the operations manager said. “The fine print is where you can really get hurt.” When VeriShip applied the new contract to the shipping patterns and data of our company, the initial savings of $145,000 turned into a $415,000 increase in shipping costs.

    “It was a shock but VeriShip immediately showed us what to negotiate,” he said. “They also suggested we bring in another major carrier to bid on the contract to help us hedge our negotiations and leverage our buying power.”

    Outcomes: The Company Shoots, Scores – And Wins

    The VeriShip team provided thorough analyses that broke down the complexity of the contract and gave him guidance on more appropriate fee structures, based on benchmark data from across the industry, aggregated in VeriShip’s parcel intelligence platform.

    “It was clear we needed a deeper discount on dimension and weight surcharges for parcels over 50 pounds and VeriShip told us exactly what to ask for based on industry-wide data,” the operations manager said. “Since we knew where the rest of the market was, we could negotiate more precisely and confidently.”

    “VeriShip even gave us negotiating tips on where to get tough and where to go easy,” he said. “It was good to get their insights on the finer points of phrasing and delivery.”

    The VeriShip projections have been on target and the detailed reporting has been excellent. The operations manager can access and send VeriShip reports to accounting and other departments on demand and everyone in the company can see the results immediately.

    “The value that VeriShip brings to the parcel auditing and contract negotiation process is remarkable,” he said. “Their expertise has saved us and our shareholders hundreds of thousands in hard costs and probably several million in stock value. It’s been a huge win for us.”

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