For every business, inbound freight is a vital component of their supply chain. The management of inbound loads by vendors and suppliers is often left to the discretion of companies. If companies neglect their inbound freight strategy, the transportation process can become obscured, and full of hidden costs, and overspending is a result.
For many companies, different parts of the supply chain are given more consideration and oversight than other parts. Consequently, companies tend to overlook inbound shipments, despite the fact that they can account for a significant portion of transportation costs. In fact, in some companies, inbound costs can reach 40 percent of the entire transportation budget.
How to reduce inbound freight costs?
Freight management must be controlled in order to reduce costs on incoming shipments. With this in mind, you can identify optimization opportunities and identify gaps that need to be filled. It’s not just about cost savings when it comes to analyzing and improving your inbound freight movement. Ultimately, it enables more visibility into your supply chain and fosters a more trusted relationship with your vendors.
Review your approach
Ask yourself if your vendors meet the compliance program standards, what level of supply chain visibility you have, and how much control you have over inventory movement. Relationships with your vendors are crucial, and the key to these relationships to be a success is communication. Most likely, you’re losing out on many of the benefits of a collaborative partnership because you’re not communicating effectively.
To get the most from your inbound shipments, you’ll need to stay up to date on the current state of the economy to determine whether you should put in more or less oversight. This will certainly help you find opportunities to reduce your inbound freight spending.
Enhance visibility with technology
Supply chain executives can set their own terms and conditions for suppliers and vendors with the help of inbound software. This includes deciding which parties will enter the shipment information. One option is to have the supplier enter the shipment information so that the logistics team can be notified and booked appropriately to meet business requirements. Alternatively, the executives could designate the supplier to directly book with preferred carriers and suppliers, which results in reduced costs. Either way, it is always at the discretion of the executives to determine the best process based on inbound software insights.
One of the crucial factors of successful inbound management is high visibility into the supply chain. Thanks to technology, companies can track their shipments through the transportation management system (TMS). Additionally, a TMS like PLS Pro lets you manage shipments and collect valuable data for strategic planning and defining inefficiencies.
Enforce a retail compliance program
In a vendor compliance program, the retailer or consignee and the supplier come to an agreement with clearly stated terms and conditions when moving freight. Vendors must comply with delivery times and other performance requirements outlined by retailers. As a part of this agreement, the consignee also specifies penalties for the supplier’s failure to comply with terms and conditions. The vendor compliance program gives both parties a clear picture of how they work together and has a significant impact on the performance of inbound shipments.
Inbound freight management with PLS
In summary, the more transparent your inbound freight is, the better. PLS can help you reduce your inbound costs with our inbound freight solutions and a proprietary TMS. Consider applying for a free, no-obligation Freight Bill Analysis or Logistics Opportunity Assessment to see how you can save on your logistics strategy!
