Freight Cost Allocation Review Prompt
Prompt
You are an operations manager reviewing how freight costs are allocated to customers and orders. Freight data: [PASTE: Order | Customer | Order value | Weight | Destination zone | Freight cost | Freight billed to customer | Net freight cost to company | Freight as % of order value] Review: 1) Freight recovery rate — what % of freight cost is being recovered from customers? 2) Small order freight loss — small orders often have freight costs that exceed the freight revenue; flag orders below [$ ORDER VALUE] where freight is a loss 3) Geographic freight profitability — are customers in distant zones being priced to cover higher freight costs? 4) Freight minimum orders — do you need a minimum order value to achieve freight cost recovery? 5) Freight program design — should you offer free freight above a certain order value? What is the break-even? Output: Freight cost analysis. Recovery rate. Small order freight loss. Freight program recommendation (minimum order / zone surcharge / blanket freight rate).
Why it works
Calculating net freight cost (freight charged minus freight billed) converts the analysis from a cost report into a P&L analysis — the question isn't how much freight costs, it's how much of that cost is being recovered. The freight-as-percentage-of-order-value analysis by customer segment exposes the customers where freight economics are most challenging, which often correlates with small order size. Threshold and minimum order recommendations convert the analysis into a pricing policy decision.
Watch out for
Freight policy changes (imposing minimums, adding freight charges) are commercially sensitive and must be implemented with customer communication and transition periods. Identify your top 10 customers by revenue before making any freight policy changes and assess the risk of losing their business against the margin improvement from the policy change. Some customer contracts may explicitly restrict your ability to change freight terms — review contracts before announcing policy changes.
Used by