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Purchasing (from www.purchasing.com)
January 18, 2007
Arrow Electronics Gains Visibility Through Freight Payment Data
By Staff

For a long time, Arrow Electronics yearned to gain more visibility into its huge small-parcel spend. Thanks to the work of its third-party freight payment vendor, today it has that visibility and is using it to reduce its logistics costs and improve its processes.

As a distributor of electronic components and computer products, Arrow is primarily a small-parcel shipper with a very complex global supply chain. Most of its shipments are carried by well-known small-parcel carriers, including inbound shipments from hundreds of product suppliers, to its 11 distribution facilities worldwide and then onto thousands of customer locations. The majority of its North American shipments are two- or three-day ground, with two-day air freight for the computer products division, shipping servers two-day.

Such a high volume and frequency of shipments creates a high number of transactions and a lot of data to track.

“Data is the most important thing in managing transportation because transportation is very transaction-driven,” says Leif Holm-Andersen, director of transportation at Arrow in Melville, NY.

The most important data in a distribution business may be the freight payment data. To better manage, track and leverage its freight payment data, Arrow has a long-term relationship with third-party freight payment provider Data2Logistics in Fort Meyers, FL. Bringing in a third-party provider to collect data lets a shipper analyze and measure process improvements, Holm-Andersen says, “to make sure you’re getting what you want from certain improvements, without having to do a lot of data cleansing.”

Holm-Andersen cites a recent case where Arrow had shifted much of its business away from a certain small-parcel carrier, but after reviewing its freight payment data, realized it was still making payments to that carrier.

“Some carriers have a policy that shippers are responsible for payment of the transportation if the consignee defaults on it,” he says. “We were losing a lot of money on these payments.”

But identifying these collect shipments was not easy. The carrier’s EDI invoice did not identify the re-billed shipments as such and the payment was re-billed under Arrow’s rates, so those transactions cleared the freight audit.

Arrow worked closely with Data2Logistics to develop a process that would help identify these payments ahead of time. Arrow can investigate the reasons for the re-bills.