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Top 10 Tips for Transportation Contracts |
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Make the effort to understand the part your transport provider plays in meeting your customers needs.
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What do you want to achieve? Be clear about your expectations eg. low cost, improved DIFOT, certainty of service etc.
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Write your expectations down, prioritise them! Check throughout your company that you have agreement on these otherwise internally you will have conflicts.
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Research the market - not all suppliers are the same - not all are equally able to meet your needs.
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Decide in advance what type of contract you want to deliver business results; short term, long term, cost plus, exclusive or non exclusive etc.
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Undertake your research on the market in advance - what are the cost drivers for your provider is it labour, fuel, capital costs? What is the state of the supply demand balance - where are you in the cycle?
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Understand who is taking what risks whether that be volume, exchange rates , inflation etc
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Don't argue over things neither of you can influence. Escalation clauses can diffuse/avoid unnecessary debates over pricing.
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Do not institutionalise inflation - make sure there is always motivation to improve.
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Create regular discussion forums to review performance raise and resolve problems.
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