10 Tips | Managing Inbound Freight
Inbound freight can be challenging to analyze or control, but it significantly impacts operational results and costs. Traverse this "final frontier" of supply chain management by collaborating on the following strategies across departments.
1. Dive in with your suppliers. Ask what cost and efficiency benefits your vendors are providing by using their carriers or shipping schedules. The customer pays one way or another, so push for carriers that demonstrate service and reliability, not those who move operational or cost inefficiencies from a vendor's dock to the customer's dock.
2. Set and apply compliance standards. Expecting change is difficult if you haven't communicated expectations around overages, shortages, documentation, and damage. Whether you control the freight or not, focus requirements (or penalties) on issues with measurable impact. Many programs spell out fines as a backstop, but more often they exist to encourage problem-solving.
3. Get buy-in to break down silos. Look for sponsorship from the C-suite. Because logistics and transportation groups might not speak the language of procurement, find shared parameters that make this a must-do initiative. Consider go/no-go metrics in terms of impact to product margin, inventory cycle time, and safety stock.
4. Use technology for cost comparison. Many vendors provide freight allowances for purchase orders or can be convinced to include them. However, it is a heavy lift to determine what is more cost-effective when managing a high volume of vendor shipments. To keep things real, use a transportation management system (TMS) to compare allowances against real-time market costs. Make decisions in the now rather than reviewing old data with multiple interpretations.
5. Review networks and match freight flow. Utilize inbound carrier capacity by matching outbound freight. Creating opportunities for carriers to plan loaded miles in two directions can be as simple as a map with an overlay of suppliers, distribution centers, and customer locations to visualize opportunities. In-depth network or center of gravity studies can help uncover the value your location or schedules create for both vendors and carriers.
6. Consolidate loads, choose the best mode. The cost to unload 10 to 14 less-than-truckload shipments can be more than five times the cost of unloading a single truckload. Everyone wants to ship a full truck, and the right third-party logistics (3PL) provider or TMS can identify when loads can be consolidated from purchase orders or through milk runs across geographically similar vendors. Whether multiple times per week or per quarter, wins here add up.
7. Make visibility a prerequisite. Improving visibility can help operational planning, avoid lumper charges, and set customer expectations more effectively. Go beyond the advance shipping notification and push for enhanced shipment visibility during supplier negotiations. In-transit geolocation technology and predictive parcel updates have become more accessible through technology and 3PLs.
8. Remember the yard. Most purchasing groups can appreciate improvements in receiving cycle time. Aim to improve yard flow by implementing appointment scheduling in a user-friendly supplier portal.
9. Choose how you control wisely. Inbound freight is a final frontier in supply chain management strategies for good reason. Appreciate whether the effort to analyze or take control of your inbound freight requires more overhead than your organization is ready to invest in. Consider choosing a partner who can validate whether there is an opportunity or if the status quo makes sense.
10. Review inbound freight and repeat. When vendors change or distribution centers move, an inbound freight analysis can become obsolete. Set a regular cadence of review internally or with a partner who can shoulder some of the load.
SOURCE: Marty Shea, Sales Manager, ODW Logistics