Refrigerated prepared foods
Spending more on freight took $1.25M out of ingredient costs.
Reser’s Fine Foods is one of the largest family-owned prepared foods companies in the U.S. Its ingredient suppliers handled inbound freight. When freight rates came down, their delivered prices didn’t.
- Who
- Reser’s Fine Foods
- Size
- 5,000+ employees, 14 facilities
- Inbound savings
- $1.25M
- Scope
- Total landed cost
What was going on
Key ingredient suppliers shipped to Reser’s plants on delivered pricing, so the supplier controlled the freight and folded it into the price of the goods. Rates jumped in 2021 and 2022. When they eased, the delivered prices stayed where they were, and there was only so much left to win by negotiating with suppliers.
We knew there was an opportunity, but it wasn’t until we really looked under the hood with our logistics partner that we understood how much control we had been leaving on the table.Stephanie Bloom · Director of Corporate Purchasing, Reser’s Fine Foods
What we did
- Added up transportation, warehousing and supplier markup as total landed cost, instead of looking at the supplier price alone
- Pulled the freight cost back out of the delivered price on key ingredients
- Moved that inbound freight under Reser’s control
What changed
| Measure | Result |
|---|---|
| Savings on inbound raw materials | $1.25M |
| Net savings after taking on the freight | $600,000 |
Why it worked
Reser’s spent more on transportation up front and paid less for what it bought. A low freight line on a report doesn’t mean a low total cost. Reser’s could act once it saw the freight buried in the delivered price.
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