As little as four years ago, shippers began to realize the problem with inbound freight operations. Prices were increasing, but almost 33 percent of shippers saw relatively no change in overall operations which gave rise to an even bigger problem—shippers were operating without real visibility into inbound logistics, and vendors had been aware of this fact for quite some time. Vendors and suppliers were taking advantage of shippers, resulting in higher inbound freight spent, which currently is approximately 40 percent of all freight spend for the average company. As more companies implemented an inbound freight routing guide, another problem arose. Many vendors and suppliers remain out-of-compliance, resulting in higher inbound freight costs. Fortunately, shippers have wised up to the issue and are leveraging TMS capabilities to ensure suppliers and vendors do not result in added charges.
Challenges of Poor Inbound Freight Vendor Compliance
Many problems continue to impact shippers, and significant challenges exist in managing inbound freight vendor compliance. The average organization will spend one $65 million on transportation and freight management each year, and these companies expect to handle more than 34,000 inbound shipments per month. Unfortunately, this is led to the worsening of the capacity crunch, resulting in higher inbound freight costs. Also, outbound freight costs are rising in tandem, resulting in even less money available for inbound spend. Instead of trying to put out the endless fires, shippers are looking for alternatives to eliminate these challenges, pushing and forcing vendors and suppliers into compliance. Unfortunately, some suppliers and vendors may be lost in the process, but another will always be available.
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A TMS Enhances Inbound Freight Management
To eliminate all uncertainty with inbound freight vendor compliance, shippers are leveraging a transportation management system (TMS), which provides real-time visibility into all transportation activities. Moreover, multiple shippers and suppliers using the same system can work together, not against each other, for proactive inbound freight management and for their overarching freight costs. It provides a win-win for both shippers and suppliers alike. Even carriers get in on the action, realizing better planning for load management and much more which will have a resounding effect on customer service levels, which are expanding today.
Deploying a TMS offers real benefits for all parties using, which may include:
- Reduced freight costs.
- Improved supply chain KPIs, allowing for continuous improvement.
- Better resource use, including labor planning.
- Decreased order-to-case cycle time.
- Better inventory management, reducing carrying costs and unnecessary overstock.
- Enhanced shipper-carrier relationships, increasing eligibility for shipper-of-choice status.
Best Practices in Using a TMS to Enforce Business Rules for Shippers
Even though the use of a TMS is the best practice to follow, it helps to have a few additional tips to ensure you maximize the return on your investment.
- Integrate your TMS with all systems. Integration ensures that all systems rely on the data and produce verifiable insights.
- Get carriers and suppliers to use the same system as your organization. When all parties involved in your supply chain leaders the same system, collaboration, and communication increases, reducing inbound freight management hassle.
- Deploy sensors to gain real-time visibility into shipment status. Deploying sensors that can track real-time data will further enhance the capability of your TMS.
- Track vendor and supplier compliance with the inbound freight routing guide. You cannot manage what you cannot measure, and the TMS provides a means of tracking and holding vendors feet to the fire for compliance with your standards within the inbound freight routing guide.
- Diversify carrier relationships. Adding additional carriers to your operation could increase competition among those you use, offering extra leverage in renegotiating carrier contracts or shipping in the first place.
- Use a TMS that offers reporting capability. Alone a TMS is useless, but it’s reporting capabilities can help shippers and carriers make informed decisions and avoid unnecessary expenses.
- Let an expert manage inbound freight. Complex issues will arise, but shipper should work with an expert, such as assets, to manage complex inbound freight issues.
- Remember reverse logistics. The final tip is simple and complex; shippers must remember the role of reverse logistics in managing inbound freight. Everyone will return something at some point. It is best to understand your inbound reverse logistics processes, just as much is it is to recognize those coming from your suppliers.
Deploy Your TMS Now
Every moment lost waiting to deploy your TMS represents missed opportunities for savings and even increases in your freight spent. Let go of these added costs by deploying and implementing your TMS now. If you are unsure of which TMS to use, the Cerasis Rater is an excellent way to gain complete control and both inbound and outbound freight.
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