Inbound freight consolidation is an effective way to gain control over inbound freight and reduce costs. Inbound freight management is exceedingly complex, and this complexity is only increasing as the number of retailers interested in engaging in omnichannel retail increases. While many practices can help shippers and vendors improve inbound freight management, the use of inbound freight consolidation is the most promising.
Challenges in Inbound Freight Management
Before you can understand why inbound freight consolidation Is the go-to Solution for effective inbound freight management, It Is important to understand some of the challenges in today’s supply chain networks. These include:
- Wide vendor networks.
- Too many carriers in the mix.
- Poor visibility into freight shipping costs.
- Poor dock scheduling.
- Detention fees for drivers held in the yard.
- Higher carrying costs for vendors sending too much product at a time.
- Poor communication with vendors, drivers, and carriers.
How Inbound Freight Consolidation Contributes to Better Operations
Shippers that effectively manage inbound freight through consolidation can take advantage of significant freight benefits, including:
- Pricing simplicity.
- Reduced transit times.
- Higher service levels.
- Fewer accessorial changes.
- Stronger carrier relationships.
- Greater visibility.
- Less congestion at loading docks.
- Reduced fuel and emissions.
- More control over dock schedules.
- Fewer opportunities for damage and risk.
Best Practices to Consolidation/Deconsolidate Inbound Freight Effectively
Of course, developing an inbound freight consolidation practice in your inbound freight programs and process is not a simple task. To ensure nothing is overlooked, shippers should follow these best practices:
- Adopt vendor compliance policies, says Brian Barry of Multichannel Merchant. Vendor compliance policies are how a shipper holds vendors and suppliers accountable for failures in inbound shipping. In other words, vendor compliance policies detail which carrier to use, when to ship product and more.
- Partner with the right suppliers. Although the inbound routing guide can be optimized to fit any situation, it is important for shippers to partner with the right suppliers. An extensive supplier network may offer the promise of better competitive advantage, but if suppliers consistently failed to meet requirements within your routing guide, they should be dropped from your network.
- Implement a standard, dynamic routing guide. The inbound freight routing guide must be dynamic and allow for both freight consolidation and deconsolidation. There will be instances where it is impossible to consolidate freight due to geographic or other barriers, but specifying the unique circumstances in which shipping through traditional means is acceptable is essential to a dynamic routing guide. Moreover, processes must be in place to adjust guide specifications as suppliers and vendors involved.
- Establish penalties for failure to consolidate freight before shipping. Depending on the dedication of your company, establishing penalties for failure to consolidate freight, provided freight can be consolidated within the existing freight routing guide, will encourage suppliers to follow the guide to the letter.
- Use technology to streamline consolidation/deconsolidation. Another aspect of effective inbound freight consolidation is the use of technology, such as a TMS, to know when to consolidate or follow other shipping rules.
- Work with a third-party logistics provider (3PL) to handle inbound freight management. Choosing to outsource the process can be an effective way to avoid unnecessary expenses and manage inbound freight, as well as take advantage of new technologies, automate processes and more.
- Integrate supply chain systems. The final leg of freight consolidation are integration solutions. Integrated systems ensure data is applied, processes run accordingly, and bottlenecks do not develop.
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The Big Picture
Inbound freight consolidation can feel overwhelming, especially for shippers faced with mounting inbound freight issues and uncertain of how to achieve accurate visibility. However, inbound freight consolidation, which does take time, can speed your inbound freight, reduce the hassle of managing your dock and much more. Shippers should follow the best practices to consolidate freight off-site, deconsolidate freight as it arrives and improve visibility at the same time. So, that leaves a final question, what can shippers do to avoid missed freight pickups in the first place? We’ll discuss that in the next blog post.