The Top 6 Reasons to Have a Good Inbound Logistics Program
Most transportation costs in a company arise from inbound logistics cost. If other words, the costs associated with transportation of items from vendors make up the biggest portion of will transportation costs, reports Amy Roach Partridge of Inbound Logistics. Part of the problem lies in misconceptions around inbound logistics, including manual, data-intense processes and added stress. However, modern technology is changing the perception, and the importance of having a strong inbound logistics program cannot be overstated. In fact, let's take a look at the top reasons why.
1. Real-Time Data Promotes Use of Lowest-Cost Carriers.
Vendors are businesses too, and like businesses, they are in it for themselves first. If vendors retain control over all inbound logistics processes and selections, the best carrier rate for them may not necessarily reflect the best rates for your company.
For example, if a vendor has negotiated a lower rate with company A, they may not disclose the lower rate and bill you for the carrier’s current marketed rate. Therefore, the vendor can turn inbound logistics control into a revenue stream, with your company footing the extra costs.
Real-time data into an inbound logistics program helps your company ensure vendors are using the lowest-cost carriers as defined by your service level agreements with the carrier, not the vendor. In addition, you can use an inbound logistics program to reduce higher-cost shipments through freight consolidation and backhaul shipping, opening the door to even lower rates than you have previously negotiated with your carrier.
2. Better Visibility Leads to Effective, More Accurate Inventory Management.
Better visibility through an inbound logistics management program promotes better inventory management. If existing safe stock or expected shipments are identified and seen throughout your company, you can work to provide safeguards against possible delays. Furthermore, the visibility into inbound logistics helps to prevent cases of overbilling, overstocking and understocking. Thus, you can maximize and optimize your warehouse space while providing an undisrupted flow of products to your customers.
3. Immediate Notification of Delays and Status Updates Eliminates Uncertainty.
Delays and unforeseen circumstances do occur. An import may be held at the border for inspection, or weather may cause delays along a common route. Rather than leaving your incoming freight handling in the wind, literally in some cases, you can turn the possible loss into an opportunity to highlight your company’s ability to meet and overcome adverse situations.
Automated notifications and status updates also provide real-time visibility into possible issues, allowing your company to pull from safe stock or access additional resources via other vendors.
4. Reduced Procurement Inconsistencies Enhance Administrative Efficiency.
Administrative controls over inbound logistics reduce the number of inconsistencies that may occur. For example, if a vendor ship products without the buyer knowing when they will arrive, how they are being shipped or what level of freight insurance and protection exists, the amount of paperwork needed by both accounting and administration grows. With the use of an inbound logistics program, the number of individual processes can be reduced to a one-touch platform, eliminating risks and ensuring all vendors stay on the same page. Meanwhile, this also reduces the amount of paperwork needed in paying vendors and managing shipment-related documents, including bills of lading.
5. Customer Service and Satisfaction Rates Increase as Overall Product Costs Decrease.
A key benefit of managing inbound logistics through a dedicated program falls within the scope of increasing customer service capacity and satisfaction. When customers receive their products undamaged and as expected, they are more likely to make repeat purchases in the future. Thus, the amount of overall business increases, which helps to drive down overall product costs and boost your company’s image.
6. End-to-End Control Promotes Vendor Compliance.
Although vendors are supposed to stay in compliance with the rules laid out by the inbound logistics vendor guide, some fall through the cracks. Updates may be made to the document, and the lack of control over vendor actions and shipping selection may continue to exist. Thus, an effective TMS that includes a vendor module can help eliminate this risk, returning control over the entire, end-to-end supply chain and giving buyers the ability to reap cost savings.
Your Inbound Logistics Program: What's Next?
Clearly, the positive effects and relative ease in implementation an effective inbound logistics strategy and program outweigh the potential drawbacks, many of which are not as laborious as believed. In fact, the Cerasis Rater now includes a vendor module, letting vendors work directly with the Cerasis Help Desk, putting the or of inbound logistics back in your hands. Since using the system requires minimal changes to your existing workload, you can take advantage of these core benefits and access a new revenue stream while reducing your inbound costs simultaneously.