Month: May 2018

  • May 22, 2018

    Export audit made effortless

    This is your Auditor speaking, happy Friday to you. “Of the total 3600 shipments sent last year, please explain why in 2796 cases, export vendors with lowest quotes were ignored to give export orders to vendors who quoted higher prices. Please explain what kind of negotiations were done with the vendors for these 2796 shipment orders and disclose if any of the vendors who received the orders were known to you in personal capacity. Please send your response with copies of relevant documents by Sunday evening, so the same can be attended to on Monday morning.” Now who loves audit? Except Auditors ofcourse. In an import/export business where for each enquiry one needs to deal with multiple vendors, maintain multiple rate sheets, comparisons sheets of actual versus contracted rates, compile approval documents, reports and what not, this work is such a hassle that generally people are not able to maintain cent percent accuracy.  Then at the time of audits, revisiting the past matrix of sheets and notes requires a mammoth investment of time and money both from the team and auditors. Time can be as high as 250 man hours annually. And as usual, despite all the digging, Auditor would ask for the details that couldn’t be found. These folks for sure have a sixth sense. But there’s one more set of professionals who don’t mind audits. Ones who use GoComet to manage their logistics process. Audits is a piece of cake for them. Or lets say “peace” of cake. So why GoComet users aren’t perturbed by audit? Here’s why: Your biggest audit worries would come from selecting a vendor whose quote wasn’t the lowest. Naturally everyone wants to know why you overlooked a better rate and opted to do business with an expensive supplier. If you’re using GoComet, every time you selected a non-L1 vendor to...
  • Chemical companies are big time exporters of full container loads(FCLs), roughly ranging from 50 containers to as high as 350 containers per month managing 40-60 trade lanes in a month. An individual freight forwarder in today’s competitive world of shipping and rates can only be numero uno in 5, maybe 10 lanes. So such a company needs to deal with as many forwarders as possible which it is unable to do. Do you know why? Let us take a specific example. A chemical company, one of the leading giants of oleochemicals exporting 150 containers in a month with 45 trade lanes. Before it started using GoComet, for every enquiry it had to pursue the forwarders on calls and mails for rates, which then had to be compiled, then compared, then negotiated and this whole loop was repeated until maximum cost saving and lowest freight was realised. Alas, this was not the case. It was sheer human labour at every round of negotiation, only so much could be achieved. The result was that profits of the company were limited as rates were compromised and not the best. This was a precarious situation to be in for the company. What do you think happened next?GoComet came to the rescue and pulled it out of its deep well of losses. There was a massive paradigm shift with the interactive platform replacing the age old manual process. The company started dealing with 80 freight forwarders for every single shipment, leaving no scope for compromise. All comparisons and negotiations became automated. But could automation happen overnight?The implementation of GoComet is very fast, owing to its simple and intuitive user interface. After 20 days from the start of the implementation, 96 % of the shipments were being processed on the GoComet platform. For the subsequent months...
  • What if you could save Rs.75.4 Lakhs easily? What would this additional Rs.75.4 lakhs mean to you – more profit, additional office, cost of one VP covered? So, how and from where do you save that extra money? A bit of math and some smart decisions can do just that for you. Here’s the trick… compare landed cost instead of Ocean freight for your export shipments. Maybe you knew it, maybe you didn’t. If you didn’t, it’s been one costly slip. Here’s the math – learn it, use it and save extra Rs.75.4 LakhsOver the years, freight forwarders who are responsible for your freight bookings have got smarter. They know you are comparing only freight cost to decide which freight forwarder to award the shipment to. Hence, they quote rock bottom freight cost, but what they do not tell you is the other hidden costs, such as, the local port charges (THC-Terminal Handling charges, BL charges, Seal Charges, MUC, Toll etc). You get to know of these additional costs only when the final bill reaches you – 40 days after the vessel sailed. What if there was another freight forwarder who may not have quoted rock bottom freight cost but was really the lowest on landed cost. And, it missed your eyes. How would this happen?The local charges of shipping lines vary hugely. For eg., Safmarine charges THC of INR 6515 while ZIM charges THC of INR 9050. That makes it a difference of USD 40 on each container! All else being equal, who will you give the shipment to – Safmarine with 200 USD freight or ZIM line with 175 USD freight? How much difference does it make?In as much as 36.9% of the cases, the vendor with status L1 is not the lowest when evaluated on landed cost...
  • Imagine you have 6 vendors for a particular service with same offering, but you can buy from only one. How do you ensure that you get the best price? You mostly do simple negotiation. In simple negotiation you call or email each vendor and ask for quotation. Once quotes are in, you speak to top few vendors to negotiate and then you finalize. Most buyers believe that they are the best negotiators. But that’s before they find out about compounded negotiations. What is Compounded Negotiation? Think about how compounding works to give you best return on investments against simple interest. Underlying idea is to make each unit of value chain work all the time. In case of money, it’s the units of time that forces growth on each value block which is money. This kind of compounding is what a reverse auction process forces on each participant all along the bidding process. Beauty of this process is how each vendor’s action triggers multiple one on one competition that is self-perpetuating. The entire race to quote lower ends only when the auction ends. Best compounded negotiations are done in a computer assisted environment, since such systems are free from fatigue and bias that humans are prone to. In GoComet’s reverse auction process for instance, each vendor submits their quote on the internet based platform. Then they are shown their own quote rank (L1, L2, L3 etc). Making use of the psychology of the vendors, they are encouraged to reduce their quotes to win the business. Hence L3, L4, L2 try to come to L1, if L1 becomes L2, they again try to come to L1. This is continued until bidding time is over. This process ensures that each vendor is transparently competing with every other vendor. Any vendors who reduces the...