Minimum orders used to be commonplace in the animal health business. Not so today. In general, we have swallowed the costs of delivery in animal health supply chains. This is not true for those shipping products ordered from websites. In fact, it is common to see charges for shipping and handling on internet orders.
The current boom of internet sales affects shippers, including FedEx and UPS. Both have announced rate increases. Efficiently delivering small packaged goods requires increasing investments in logistic infrastructure and delivery network. These costs are passed on to shippers who then pass those costs on to their customers.
So, what does this mean? The main way to reduce the impact of rising carrier rates is to manage inventory against a forecast of inventory depletion versus suddenly finding you have no inventory on hand. There is little rationale for orders of less than $800 to $1,000 in a two-FTE practice ordering $250,000 or more of drugs and supplies annually.
Source: Industrial Distribution, September 20, 2016.
FedEx’s news came after UPS’s on Sept. 1, when it announced a new freight service rate hike of 4.9 percent that was effective Sept. 19. Effective Dec. 26, UPS’s Air and International services will also increase 4.9 percent. UPS said the rate increase is to help pay for added investments in system upgrades and expansion.
INSIGHTS: Representatives often ignore that their primary job is to efficiently replenish the active items inventory with each customer. Selling comes into play when promotions create an illogical quantity on hand result for the customer or when a brand switch is indicated.