An inbound vendor routing guide is comparable the beating heart of your operation. It manages inbound freight, not unlike the incoming blood supply from the lungs, and pumps it out to the remainder of your supply chain. Unlike the heart, however, your routing guide needs to be continually updated to reflect the most relevant changes in carrier preferences, stipulations for compliance violations and detailed instructions on how to handle different shipping circumstances.
Creating an effective inbound vendor routing guide is not without its share of challenges. If you do not do it fast enough, it becomes obsolete before printing, and if launched too quickly, you risk forgetting important details in its scope. Follow these steps, as outlined by Inbound Logistics, to create a working, evolving guide that puts the power of control and visibility in your hands.
1. Assess Your Current Inbound Vendor Routing Guide.
If you do not have an existing guide, create a list of the challenges and issues that your organization has experienced regarding vendors, such as early/ late shipments, high-cost carrier selection or mislabeling. If you already have a previous version, review it for issues that were not addressed or were repeatedly missed by your vendors. Detail is key, so making annotations to your existing guide are essential to getting the next version ready immediately.
2. Start Where Shipments Begin.
The first part of the guide should focus on the origination of shipments. For example, provide direction for each vendor that comes from a specific area. This will help prevent vendors from becoming lost later in the process.
3. Identify the Limitations and Provisions for Each Form of Transportation for Each Area.
Service capabilities, political or international trade restrictions, duration of transit, such as overnight, next day, two-day or three-day service, and transit mode should follow the origination. For each weakness or issue, provide instructions on how to avoid delays and ensure adherence to appropriate carrier selection and freight classification.
4. Note Shipment Volume and Weight Issues.
Volume and weight should be classified appropriately into one of four groups, including the following:
- 1 to 150 pounds or small package.
- 151 to 5,000 pounds.
- 5,001 to 12,000 pounds.
- 12,000+ pounds.
The guide must specify the preferred carriers and paths to shipment for each classification. This includes accounting for variances in freight classification and cost due to increasing use of dimensional (DIM) pricing models. In addition, include provisions to modify shipment sizes to meet the most cost-effective choice. For example, freight consolidation of small packages and shipments weighing less than 5,000 pounds should be held until enough freight can be sent via less-than-truckload of full-truckload shipping.
5. Make It Verifiable, and Use Cross-Checking Matrices.
This is among the most difficult aspects of creating an effective guide. It needs to have a fail-safe to prevent vendors from selecting incorrect shipping methods and provide a source of cross-checking between shipment selection. A defined set of rules should serve as the “checkpoint” in this part of the document, ranging from marking and labeling to back-order processing.
Within the rules, you should clearly specify costs or chargebacks associated with violations of the guide’s provisions. Such rules provide an incentive for vendors to adhere, and at your discretion, consider implementing a reward system for vendors that meet reliable standards for metrics, such as on-time delivery and appropriate fill rates. Include a privacy clause that holds vendors liable for any unknowing or knowing act of distribution of your guide to your competitors.
6. Distribute It.
The faster your guide gets to vendors, the faster they can implement changes. However, printing of paper guides is outdated. While a printed format might be the choice of some in your organization, remember that technology is only advancing. If you stick with a paper guide, you will be obsolete within the next few years.
Consider using a web-based portal to provide access to your guide. This allows you to require vendors to sign in and acknowledge having read the document before using it. In addition, a web-based guide eliminates all printing and mailing costs associated with it, and creating non-disclosure agreements via a secure web-browser are relatively easy in today’s world.
7. Distribute Updates.
Remember “Security Patch Tuesday?” Well, apply the idea to your inbound vendor routing guide. Make sure vendors know changes to the guide will be updated every (x) weeks, and include this notification in the initial NDA and distribution of the document. Web-based guides also have the benefit of enabling automated notification of major changes to the guide to vendors.
Let the Inbound Vendor Routing Guide Live Within Your TMS!
The final step to creating your routing guide is not really about its creation; it involves where the guide is located. If you consider the applications of a transportation management system (TMS) for your company, it is not a stretch to use the same system to manage all inbound freight. In fact, the TMS can follow all the rules, and then some, of those identified in your guide per your request, while providing automated data analyses, and matrices within the system can effectively eliminate incorrect selection.
Of course, it does help to have the document available for viewing by your vendors within the TMS and in another, secure online location. This way, your document can be a living, breathing creature, as explained by Deborah Catalano Ruriani of Inbound Logistics, that helps move your organization forward.