Modern shippers must oversee thousands of individual processes and activities. With the added pressure to lower costs to end-users, your customers, it’s no surprise that the need for increased scrutiny and cost reductions among inbound logistics partners, your vendors, has gone rogue. Some cite a lack of visibility or lack of control for reasons to not manage inbound logistics, and while proponents of “increased visibility” argue more information begets more effective inbound logistics strategy, its meaning gets lost in the murky waters of the internet.
Instead of trying to gain visibility by tracking every detail involving inbound logistics on your own, the biggest roadblocks to effective inbound logistics management boil down to five reasons, and you need to understand what they are and how to stop them.
1. Lack of Trading Partner Understanding.
The first roadblock is simple. If your vendors do not understand your organization’s policies and procedures regarding inbound freight, how can they adhere to your needs? Vendors need access to stringent, high-quality instructions for how to bring shipments to you. This is where an effective inbound logistics guide becomes important. As explained in this blog post, the guide details how to proceed with all possible scenarios for inbound shipments to reduce their associated costs. In addition, you need a vendor compliance program within the guide to stop vendors and suppliers from violating your wishes.
2. Stakeholders Fail to See Value in Effective Inbound Logistics Management.
A Peerless Research Group (PRG) report indicated that up to 44 percent of supply chain entities do not actively have plans in pursuing or using a transportation management system (TMS), such as the Cerasis Rater. This means that a near-majority of companies are faced with the pitfalls of internal, low-guidance systems for managing both inbound and outbound freight. The information only gets grimmer from here.
Approximately 54 percent of companies actively run metrics on inbound freight, but these metrics may be lacking. In other words, the term, “metrics,” can be deceiving. Since a metric is a data point, metrics can include the number of vendors used, the percentage of on-time deliveries or spend-to-carrier ratios. The nominal information gleaned by each of these factors results in confounding data that may be highly affected by metrics not being measured. So, having a strong TMS is essential.
3. Inbound Freight Management Means More Number and Analyses.
In keeping with the metrics’ conversation, a true inbound freight management program means more data and analyses will be needed. For companies operating within tight budgets, the usefulness of effective inbound strategy escapes them. However, modern freight management systems have taken these added costs away from labor. In other words, automation has replaced the need to hire skilled technicians and engineers to interpret data.
For example, the Cerasis Rater aggregates metrics and key performance indicators (KPIs) automatically, giving your company the information it needs to adjust and move forward on inbound strategy. Furthermore, automation is key to brining inbound and outbound logistics strategy to maximum efficiency.
4. Departments Fail to Collaborate.
The procurement department manages inbound product, and the supply chain department manages outbound product. Although ideal for its specific purpose, the disconnect between departments means that opportunities for cost savings are lost. Inventory levels may soar or fail to meet customer demand, and profits become losses. As explained by Amy Roach Partridge of Inbound Logistics, organizational silos have grown in scope in conjunction with the growth of the global supply chain.
Buyers and sellers may appear to have different responsibilities, but since they both perform vital functions for the other, they need to work together. This enables a better flow of procurement products to the end-user and a flow of orders back to vendors or manufacturers.
5. “Vendors Save Money When They Have Control.”
The person making the carrier selection has control over shipment costs. This is a simple fact behind all businesses. If you get to pick it, you are likely to select that which gives your company the greatest advantage and profit margins. Unfortunately, you cannot simply force vendors to relinquish control of their shipments, or can you?
Third-party logistics providers (3PLs) have risen in this space to re-distribute the control of supply chain processes to all parties, providing end-to-end benefits for all involved parties. Unless a vendor has a proprietary product, you may be able to obtain the same product at a lower cost, or you could approach the discussion on carrier selection by focusing on how reduced costs contribute to savings and increased revenue for the vendor as well. The key is taking your time and not making sudden decisions without having a backup plan in place.
What You Need to Do Immediately.
Stop making excuses for why your company cannot manage effective inbound logistics. While the truths behind the reasons for not managing inbound logistics seem harsh, they are necessary to help your business in new ways and meet rising demand of consumers. With only 25 percent of organizations utilizing a TMS, opportunities for growth and greater competitive advantage are everywhere. It’s time to marry the inbound and outbound departments and start benefiting from a dedicated TMS now.