Clearly, managing inbound shipping is challenging, as stated in our previous blog “3 Inbound Shipping Challenges Logistics Executives Face Which Impact the Entire Supply Chain“, where we stated a lack of control, visibility, and a constant fight of rising freight costs. Fortunately, there are now practical, inbound logistics managed services that enable companies to manage processes, increase visibility, and gain control of their inbound shipment costs. A complete managed service solution combines expertise in complex logistics and with an on-demand system, such as a transportation management system for both outbound and inbound logistics management.
Effective Inbound Logistics is Truly a Combination of Technology and Expert Service
Transportation Management Systems (TMS) automation features in inbound logistics are a key component of a successful managed service for inbound freight because they allow all the participants in the ecosystem to be managed – suppliers, carriers, partners, employees, and customers. In Aberdeen’s Transportation Management Benchmark report, it was noted that while 70% of companies have seen freight costs increase, a few leading companies have actually reduced their total freight costs over the last 2 years. They did so by using software systems to increase the visibility into shipment status, and by increasing the control they have over such decisions as carrier choice, routing, and price. In addition, well designed integrated managed services delivered by logistics experts and powered by TMS ensures compliance by suppliers and employees to the customer’s optimized route guide.
Automation and domain expertise is a powerful combination to achieve savings.
Automation in Inbound Logistics
Automation of the routing guide, shipping processes, and reporting are important to effective outsourcing of logistics to a managed services provider. One which all participants of the ecosystem can access with appropriate permissions simplifies and accelerates logistics execution thus, an on-demand web-based TMS is important to achieving the cost savings and decrease inefficiencies (and costly errors). The managed services providers should be using a system that is:
- Carrier neutral – allowing buyer to choose the most costeffective shipping method, such as Full Truckload, Less-Than-Truckload (LTL), or small package (FedEx or UPS)
- Encompasses the entire shipping ecosystem – suppliers, carriers, transport modes and employees.
- Has a Web-services architecture – allows for integration with partners and internal systems
- Is permission based – Allow real-time, anytime anywhere visibility into all shipments.
- Has a powerful, flexible rules engine – Companies can globally enforce and update routing instructions, carrier selection and special shipping requirements in a flexible, user-friendly environment.
Require and Acquire Logistics Expertise
Moving freight around the country, is an exception-driven process with unforeseen changes taking place regularly. For example, how to avoid a superstorm on the East Coast, a sudden supply problem in Georgia or a transportation strike in Los Angeles. A dynamic logistics environment requires domain experts to manage daily activities, communicate issues with stakeholders and make decisions on-the-fly. When outsourcing, select a provider whose logistics teams expertise is both deep and broad so they can handle every imaginable contingency. Compared to hiring in-house staff with such expertise, outsourcing can be a very cost-effective option.
Inbound Logistics Integrated Freight Managed Services
The role of integrated freight management services, as a compliment to a TMS technology offering, is to address the problem of supplier compliance, reduce costs, and to bring logistics expertise to bear on every inbound shipment. Offerings vary in the degree of automation, the integration of the players in the ecosystem, and in depth/breadth of expertise. The best freight management service providers use a TMS software and connect the suppliers directly into the system. The TMS software also gives them the ability to both implement rules and process – and change them rapidly. Compliance by suppliers is achieved initially through the customer’s request. Once suppliers benefit from the reduction in errors, they prefer the managed service and the improved customer satisfaction. The customer uses the same TMS as the freight management services team to track and trace inbound shipments, finally gaining complete visibility, and process control over the entire inbound logistics element of their global supply chain. When a TMS is not used, the primary benefit to the customer is the expertise of the managed service provider.
Best Practices To Expect for Inbound Logistics from a Freight Management Services Provider
- Provide the ability to track and trace shipments for multiple customer roles
- Process shipment for all modes of transport
- Demonstrate logistics expertise in carrier relationships
- Manage shipment scheduling, processing and execution
- Manage contract negotiation and renewals
- Monitor and enforce business rules
- Seek dynamic, vendor-neutral freight bidding for transportation, as needed
- Provide comprehensive real-time reporting
- Understand and manage reverse logistics
- Provide full freight claims management
- Provide freight accounting services
Conclusion of Effective Inbound Logistics Management
The advantages of such a turnkey system are numerous. The best pricing is secured for both at will shipping, as well by applying pre-negotiated carrier contracts to regular inbound shipping. Thorough tracking of all logistics activities provides more informed shipping history when negotiating new contracts.
Logistics expertise in the freight management services provider ensures business rule development and enforcement is performed by professionals able to monitor the processes, execute modifications as exceptions arise, and recommend long-term changes as the international shipping environment changes.
Invoice consolidation and visibility into the true costs of inbound shipping enable businesses to implement process changes, if necessary, and reduce costs.
Outsourcing both the technological solution and the logistics expertise, eases the burden on internal shipping organizations, as well as IT staff. A service empowered by a TMS solution is fast and inexpensive to deploy, requires no new hardware or software, and provides access to users company-wide depending on role.
Improving visibility, controlling processes, and better cost management through a managed service empowered by an effective inbound logistics program, through both technology and integrated services, reduces costs and improves operations.