- Shipping policy, freight policy, and returns
Shipping and freight policies of suppliers can have a significant effect on the
selling price to the end user and the profitability of a company.
Some suppliers have minimum quantity or invoicing requirements.
Some have different shipping policies for different geographic areas.
Some suppliers offer incentives to increase order size and will even prepay
the freight costs if the order is over a certain number of units or dollar
value.The reason is that the supplier can take advantage of lower freight rates on
larger orders. Accordingly, when assessing suppliers, their shipping and freight
policy are important considerations.
Here are some of the key points to look at:
- Is there a minimum quantity or dollar amount required to place an order?
- Is there a schedule of freight allowances offered to offset freight costs and
encourage larger order size?
Some suppliers will offer, on a regional basis, a percentage discount off the
order total if the order is over a certain amount. - Does the supplier have a drop shipment quantity incentive?
A drop shipment is a term used to describe an order on which the supplier
will prepay the entire shipping cost. The criteria vary with the supplier.
A drop shipment may be a certain number of product units, cases, total
weight of the order or the dollar value at cost.- What is the typical delivery time after placing an order?
- What is the procedure for returning products?
What approvals are necessary to authorize a return?
What are the conditions?
What proof is required for returning products?
How long does the process take?
What is the restocking charge, if any, and under what circumstances does it
apply?