A CEO explains how costly a freight mistake can be.
When Federal Express lowered ABL Electronics' shipping prices in June 1994, the cable manufacturer started billing clients according to the new rates. But FedEx had neglected to update the Powership machine it lent ABL as part of its service. CEO Randy Amon, for his part, never checked daily invoices against what ABL billed its customers. For seven months, Amon says, "we were charging customers $9.50 to ship a box that FedEx charged us $10 for." By January 1995 Amon noticed the startling difference between his freight charges and freight costs on the monthly profit-and-loss statement. A quick check with FedEx revealed the problem.
"I was blindly trusting technology," Amon says. "Now I'm almost technophobic." Each day, ABL's payables clerk spot-checks the pricing of 5 to 10 shipments. The most common errors are shipments that ABL forgot to bill for. "That can add up to $200 a day," Amon says.
The Hunt Valley, Md., company eventually received nearly $11,000 in refunds from FedEx's oversight. Now really on his toes, Amon has negotiated still lower shipping rates and regularly averages $200 a week in refunds when, by using Powership's compliance-report software, he finds FedEx delivered packages after its promised deadlines.