Shippers often forget about the possible savings through an effective inbound logistics strategy. Unfortunately, this disconnect could be costing tens of thousands of dollars and eating away at your bottom line. In addition, managing vendors and inbound logistics can feel like a lot of work for little gain, yet the possible savings by implementing an inbound logistics program can add up through these key ways.
Reducing Costs in Shipping with a Focus on Inbound Logistics Strategy
Lowest-Rate Carrier Selection Reduces Your Costs.
This is the obvious benefit of having the power to control inbound logistics. You choose the carrier, and special, negotiated rates you may have with a carrier can be used. With the exception for time-sensitive shipments, you can drive costs down by always ensuring the lowest rate carrier is used for inbound shipments. Think about it. What’s really stopping a vendor from picking a carrier that is best-suited for the vendor’s needs?
You need to make sure that your business benefits from carrier selection, not your suppliers. Moreover, having control over the carrier selection might make things easier for vendors because they have fewer responsibilities in sending shipments. While some vendors might disagree with plans to implement and inbound shipping strategy to reduce your costs, remember that you must look out for your company first.
Metrics and Auditing Prevent Overbilling and Overpayment to Vendors for Shipping Costs.
Part of the problem with not using an inbound logistics program is the lack of visibility. Vendors control the processes, and packages may show up unannounced or outside of preferred times. Furthermore, your company must pay the costs of shipping, which may more than the carrier’s charges or double-billed. Unfortunately, without controls in place, you have no way to ensure you are not paying more than you owe.
Through modern technology, the inbound logistics strategy can be executed easier than believed, and real-time order tracking and metrics prevent overbilling and overpayment. Even if a shipment is overbilled or double-billed, auditing can identify the problem and issue a chargeback to the vendor or carrier.
Metrics can also go further than auditing by giving your company a means to measure the performance of your vendors, boosting compliance with the rules and stipulations within your inbound logistics guide.
If your company utilizes a transportation management system, such as the Cerasis Rater, you can even run comparison reports and gain 360-degree visibility into all your transportation costs. In addition, dashboards reduce the amount needed to monitor and review metrics, reports DC Velocity. In fact, this degree of visibility naturally promotes better inventory management processes, helping you reduce lost costs from perishable or outdated inventory.
Streamlined Claims Processes Reduce the Amount of Time Correcting Issues.
Freight claims may arise from many issues, including damage during transit, lost shipments, unforeseen delays and more. With an inbound logistics strategy, your company could be stuck working with hundreds of carriers and vendors to work through the process. You may need to file paperwork with each carrier, adhere to different requirements for processing claims and be subject to varying reimbursement or payment procedures. In fact, misclassified freight, a responsibility that falls on the vendors when they control carrier selection and processing, is responsible for more than 50 percent of all freight claims, reports the Institute for Supply Management (ISM).
An inbound logistics strategy streamlines claims processes by keeping your company in control of the filing and processing of claims. Therefore, you can reduce the amount of work that goes into learning carrier requirements for claims and get payment for approved claims faster.
Freight Consolidation Enables Better Rates Through Volume Discounts.
Carriers charge less for shipments of greater weight and volume. However, working with multiple vendors might leave your organization stuck managing thousands of small parcels, but creating or implementing an effective inbound logistics program enables vendors to hold packages for pickup until the sum of all packages equates to full-truckload size. In addition, carriers may offer lower rates as inbound shipments may be on backhaul routes.
Consolidation is not just about individual packages either. An inbound logistics program consolidates the number of carriers doing business with your company. Thus, you can increase the volume shipped with a specific carrier, opening the door to lower rates and better service levels. In an ISM case study, a company was able to successful cut inbound freight costs by 10 percent while reducing the list of preferred carriers by 39 percent.
There will be times when allowing vendors to manage your inbound freight may be necessary. For example, if you cannot get your inbound products from any other supplier, you may be forced to deal with their programs. Unless your company is involved in a high-specialty area of the market, you can probably find the same supplies from another vendor. Ultimately, you have the power to decide how your company will proceed, and if you do take back control of managing inbound freight, you can manage the entire process and reap the rewards.