When it comes to handling shipping costs, it’s common for organizations to overlook the inbound supply chain. While effectively controlling and managing inbound freight can be challenging without a solid structure to hold vendors accountable, with the right guidance, costs can be lowered. Our transportation experts have compiled three best practices for reducing inbound logistics costs.
By working with a reliable logistics partner, shippers can make proactive improvements to their supply chains. Shippers can save a considerable amount of time and resources by receiving expert guidance from industry professionals who truly understand their business.
The initial process was successfully managing inbound freight stems from creating personalized routing guides and implementing a vendor compliance program.
While routing guides can be developed manually, they are more commonly created via transportation technology. Routing guides provide information such as acceptable modes of transportation, preferred carriers for specific lanes, delivery or receiving hours, shipment notification procedures, and exception protocol for shipments that will not meet the designated delivery window.
In the event that routing guides are not followed, vendor compliance programs outline the exact requirements between the shipper and the freight receiver. If the shipper fails to comply with standard operating techniques, the vendor compliance program determines the responsible party for payments or actions. Additionally, vendor compliance programs ensure that both parties are aligned, driving compliance, reducing variability in procedures as well as eliminating uncontrolled spending and added costs.
Leveraging technology within supply chain management appears like a logical process; however, many businesses still manage shipments manually, which can drastically reduce visibility due to the lag time of manual updates.
With the implementation of a Transportation Management System (TMS), shippers have increased visibility to inbound freight exceptions including carrier, tracking transit, and delivery exceptions. Instead of managing shipments via email and Excel, automated shipment updates from the carrier can be viewed nearly instantaneously via EDI (electronic data interchange) and online portals.
Additionally, shippers can see if vendors have chosen incorrect routing or a more expensive mode of transportation for a given shipment, immediately increasing the vendor compliance program’s accountability and effectiveness. Inbound vendor management allows companies to manage relationships more proactively and introduce a chargeback compliance program to vendors that routinely do not follow routing instructions.
When utilizing technology to host routing guides, companies can also instantly update routing guides based on changes in the industry or with a specific carrier. In an ever-changing environment, web-based routing guides enable companies to easily make adjustments regarding vendors and business strategy if needed.