3. Out-of-area shipping. Out-of-area shipping occurs when the primary
shipping point cannot fulfill an order and the order is routed to an alternate
facility. This happens when the primary shipping point is out of stock on one
or more items or is overloaded with orders beyond the current capacity. When
out-of-area shipping occurs, two things happen and neither is good! First, the
transportation cost is usually higher because the secondary location is farther
from the customer. Second, the transit time is longer for the same reason, so
the shipment may arrive later than expected. A good database of freight bills,
properly coded, can help to identify the extent of out-of-area shipping and
provide the tools for estimating the additional cost involved.