Inbound freight management and logistics are receiving a lot of attention as shippers continue to look for ways to manage and mitigate freight costs. Traditional transportation management system (or TMS) vendors help with logistics planning but do little to address what happens in the day-to-day execution. The problem is complex and logistics expertise, as well as software systems, are important to reign in the escalating costs and inefficiencies. It’s important if currently utilizing or looking to hire an outsourced logistics company, that the company offers integrated services, alongside their technology systems, to help you set up a robust inbound logistics program.
How big is the Problem of Inbound Freight Management?
Inbound freight accounts for between 40-80% of total freight spend and 75% of companies surveyed by the Aberdeen Group report that inbound freight management is a key focus point. Total freight spend is between 3.6% and 5.2% of surveyed companies’ total sales, according to Aberdeen’s results.
To get a handle on costs, businesses say they need increased visibility into shipments and orders, more control of inbound shipping processes, and increased collaboration with carriers and suppliers. Existing processes are inconsistent at best – real-time freight tracking and tracing are unavailable, plan optimization and routing rules are often not followed by suppliers; cost information is difficult to obtain, and current manual systems don’t scale well with growth. Unfortunately, 90% of shipping executives surveyed said that their current systems, including their Transportation Management Systems (TMS), are inadequate for addressing their inbound shipping needs.
5 Must-Have Automation Features in a Transportation Management System for Effective Inbound Freight Management
- Real Time Freight Rates: To combat rising transportation costs the application must make it easy for users around the country to execute policies that deliver immediate freight savings. Today, that means the application must be built with state-of-the-art web services architecture, in order to receive live carrier rates over the Internet. No more theoretical savings, but hard ROI based on live, vendor-neutral access to real-time market rates.
- Organizational Control: To regain control over inbound freight management, freight costs, and mitigating risk, a best-in-class application must have a rules engine, based on optimized plans and routing guides. The system must be flexible to accommodate custom company business rules, yet powerful enough to force all users, both internal and external, to follow the policies that ensure efficient and cost-effective shipping. The system’s usability must be such that controls can be designed and implemented by logistics experts with decades of hands-on experience in logistics, rather than by computer technicians.
- Visibility and Data Analysis Reporting: For true shipment-level visibility and reporting, a carrier-neutral, mode-agnostic data repository is critical. Managers must be able to identify up-to-date trends and patterns, accurately forecast demand and supply, and make real-time decisions based on actual data, rather than guesswork.
- Speed and Scalable. The TMS must be able to support rapid growth demands, while not feeling bloated with unnecessary features requiring onerous training or orientation. Busy logistics professionals need practical tools that deliver results immediately. A system should still work as effectively whether you have 2 inbound freight shipments per day or 100. Inbound freight management, over time, with a scalable system, should start to see greater returns as your company grows.
- Dedicated Technology and Up to Date Web Standards: The technology driving the automation must be based on open standards and an SOA architecture to allow easy integration with existing systems, including ERP. The inbound freight management shipping application must allow for rapid deployment. Delays due to IT controls and backlog reduces savings and put the success of deployment at risk. A dedicated technology team behind the TMS and logistics service provider will eliminate such updates and backlogs. Ask the provider if they themselves develop and iterate the application/system, or if the provider outsources to a software company.
A combination of inbound freight management software and expert integrated managed services provides an ideal solution to the complexities of inbound freight shipments where suppliers are a big factor in the cost-reduction effort. Partnering with a proven, reliable third party logistics company, who also has the ability to deliver both the system and the services is an ideal way to ensure the entire shipping process is effectively managed.