• 19-02-2022

How to Cut Inbound Freight Costs?

Inbound freight is a vital component of the supply chain for every business. The management of inbound loads by vendors and suppliers is often left to companies' discretion. If companies neglect their inbound freight strategy, the transportation process can become obscured, full of hidden costs, and overspending is a result.

Different parts of the supply chain are given more consideration and oversight than other parts for many companies. Consequently, companies tend to overlook inbound shipments, even though 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.

Freight management can be controlled 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, and how much control you have over inventory movement. Relationships with your vendors are crucial, and the key for these relationships to be successful 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 undoubtedly help you find opportunities to reduce your inbound freight spending.

Enhance visibility with technology

Supply chain executives can set their 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 book 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. Companies can track their shipments through the transportation management system (TMS) thanks to technology.

In a vendor compliance program, the retailer or consignee and the supplier agree 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 significantly impacts the performance of inbound shipments.