Properly organized inbound shipments are vital to successfully operating supply chains. The retailers, distributors and customers heavily rely on the performance of inbound deliveries. For the businesses, the most important concern is the ultimate cost of inbound shipping, which is almost in every case higher than it’s supposed to be. Normally due to the lack of control and visibility, these shipments can consume up to 40 percent of overall freight costs. Apart from that, maintaining good relationships with vendors and ensuring on-time, high-performing deliveries can be quite a challenge. To make inbound transportation as efficient as possible and cut off unnecessary costs, you can try several practices for effective vendor management.
In today’s dynamic business environment, every error costs you not just your budget, but also sales, customer loyalty, and reputation. The times of poor compliance and shady agreements are fading away, as companies try to switch to the transparent, pre-agreed cooperation models to ensure an effective partnership with their suppliers. One of the best solutions to eliminate costs and errors for inbound shipments is setting up a vendor compliance program.
A retail vendor compliance program is a regulated agreement, which predefines all the terms
and conditions of the relationship between the supplier and the consignee. These programs are developed to set up certain performance requirements and penalties for violation of these requirements. This way, the shippers can get their sales and costs back on every failed delivery on the vendor’s behalf. Both parties are involved in the process of determination of the conditions, but once the program is implemented, it becomes non-negotiable.
The main purpose of implementing the vendor compliance program is to put more responsibility on all parties, and mainly on the suppliers. Through this system, you can ensure better performance and at least a partial security in case of failure.
A huge challenge with inbound shipments is caused by the lack of control, or visibility, into the shipping process. Here, shipment tracking and transparency are as critical as at the last stages of the transportation process and can contain a substantial amount of hidden freight costs. Using advanced technology like transportation management systems or similar tools can give you good visibility into this part of the supply chain. However, just seeing through the process is not enough; you have to make use of the acquired information. Ultimately, analyzing data from the TMS lets you see what hinders the smooth transportation process, and where can you cut off unnecessary spending.
Often, your suppliers do not have resources or industry expertise to choose the cheapest and most efficient way of delivering goods to you. Chances are this is not even their priority, which is understandable. In most cases, vendors are focused on other things and often don’t have a skilled logistics department to optimize all the processes. Here is where partnering with a 3PL can help. An experienced team can quickly assess performance efficiency, look into spending, and make necessary adjustments to reach the maximum efficiency for your inbound freight.
We can reduce your inbound freight spend! Find out how in our case study.