Managing inbound freight is one of the most crucial parts of running a successful supply chain, but the fact is… it’s hard! Each supplier is likely to have different characteristics and the receiving company can be negatively affected by suppliers’ inefficiencies such as low levels of visibility, lack of standardization and poor communication.
When companies lack comprehensive strategies for obtaining the lowest possible shipping and unloading costs or a plan to improve supplier behavior, they leave money on the table and complicate their supply chain. To avoid this, a complete strategy for inbound freight needs to be created which encompass the following three aspects; visibility, collaboration and accountability.
Although companies have complete control over outbound shipments, that level of control dwindles when it comes to inbound freight. When it comes down to it, the receiving company does not have full visibility or planning capabilities for shipment arrivals and dock reservations. To optimize their inbound, stakeholders can benefit from better visibility of information such as knowing which carrier is being used, the exact timing of deliveries, and how much labor is needed to load and unload shipments, etc. Real-time data sharing through a single platform can ensure that everyone has the information they need to work toward a common goal.
By using a comprehensive inbound freight plan based on a collaborative ecosystem of suppliers, shippers and carriers, companies can effectively establish a dynamic rating and unloading allowance program. As companies work together with their suppliers to determine the most cost-effective method to handle each shipment (customer pick-up (CPU) or vendor controlled (VDS)) the goal should be to reduce overall shipping costs.
By giving suppliers choices, they’ll be able to select the most effective service and billing procedure. Companies should convert inbound shipments from VDS to CPU only when it’s feasible, and then establish preferred rates with a select group of carriers to handle those inbound shipments. A set of mandatory carriers to be used for all VDS and CPU shipments can be established with a standard routing guide. This will enable LTL pricing improvements, superior service levels and maximize consolidation opportunities.
While businesses can’t always control what their suppliers do or the efficiency of their suppliers’ operations, they can implement Vendor Inbound Compliance Standards (VICS) to help improve supplier behavior. A comprehensive set of vendor compliance procedures will establish rules and processes that suppliers will follow when making deliveries. These accountability levels should also extend to the company’s own teams to ensure that orders get quickly from their origin to the distribution center (DC). The goal is to improve supplier behavior so that their inefficiencies aren’t causing the receiving company to lose time and money.
By following this general recipe, companies can craft an unbeatable inbound freight management strategy that will not only save them time and money but also improve their supplier relationships.
Download the full Kuebix ebook The Art of Inbound to learn more about crafting an unbeatable inbound strategy.