Tag Archives: inbound freight

Best Practices for Inbound Freight Management

Every company works to analyze its supply chain costs and eliminate unnecessary costs and processes. Regardless of how complex your supply chain is, every part of it matters, however, not every part of the supply chain is assessed equally. Inbound shipments are often overlooked by companies, although they can account for a substantial amount of transportation costs. In fact, for some companies, inbound shipment costs can reach 40 percent from the entire transportation budget. That’s why it’s important to know some useful practices for inbound freight management.

Management practices for inbound freight

Inbound freight is cargo that comes from your suppliers and vendors. Therefore, it can be complicated and challenging to control inbound shipments and simultaneously balance relationships with your suppliers. Having robust inbound freight management can significantly reduce your transportation costs and provide better visibility into the shipping process.

Analyze your current strategy

Before trying any new strategies or making any changes, look at your current approach. Here are some key things to pay attention to:

  • Vendor compliance
  • Control of inventory
  • Visibility and tracking
  • Relationships with the supplier
  • Inbound freight costs

Try to honestly answer whether your vendors meet the compliance program, what level of supply chain visibility you have, and how much control you have over the movement of inventory. Essentially, relationships with your vendors matter even more. If you have poor communication, most likely you’re losing many benefits of a collaborative partnership.

Inbound freight management is a wide term. You can start with minor changes like checking on-time deliveries to a complete strategy shift and reload. Depending on the current state of things, you will need more or less effort to make the best out of your inbound shipments.

Inventory is the key to successful inbound management

One of the core factors of a good inbound strategy is the ability to properly control and manage your inventory. Increasing administration over the transit of your product and its quantity will help benefit your supply chain in the long run.

Visibility

One of the crucial factors of successful inbound management is high visibility into the supply chain. Thanks to technology, companies can track their shipments through a transportation management system. Additionally, TMS lets you manage shipments and collect valuable data for strategic planning and defining inefficiencies.

Final thoughts

Proper inbound freight management can bring value to your supply chain and cut transportation costs. The key to a successful inbound strategy is to make it among your top supply chain priorities. A reevaluation of your current strategy will help outline working solutions for the future.

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How to Use a TMS to Manage Inbound Transportation

TMS for inboundInbound freight management is multifaceted and can eat up more than 40% of the average organization’s annual freight budget, according to Aberdeen Group. However, using a TMS for inbound shipments can help prevent unwanted costs.

Since inbound freight savings have a direct impact on an organization’s bottom line, shippers that make it a supply chain priority reap inventory efficiencies, cost containment, and enhanced productivity and service.

Companies expect to receive about 34,000 inbound shipments every month, so even decidedly successful inbound freight shippers are likely to encounter glitches.

35% of shippers claim that lack of visibility is one of the biggest challenges of inbound transportation, while 37% say determining hidden costs, and 25% say data analysis and decision support are the greatest challenges. Shippers experiencing challenges with inbound freight management might not be fully leveraging available optimization logic with a transportation management system (TMS).

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Why Companies Use TMS?

A TMS has capabilities that make life easier, it can manage by exception, easily track KPIs, optimize carriers with routes, and proactively notify you of disruptions or risk. A recent SupplyChain24/7 article explains the distinction of shippers who use a TMS when managing inbound transportation. A TMS’ biggest advantage is that it supports inbound transportation by providing shippers with visibility.

In today’s omni-channel world, control over inbound freight management requires detailed visibility on all accounts of the supply chain. Chris Cunnane with ARC Advisory Group said, “It’s really all about visibility into freight – understanding where it is and when it’s going to arrive so that you can plan effectively.

How Can You Benefit From TMS For Inbound Transport?

With good visibility, you don’t have trucks waiting around to unload with merchandise needed to fill pressing orders while other trucks with less time-sensitive inventory are unloading. The biggest thing a TMS can provide to improve inbound logistics is that visibility aspect.”

Visibility doesn’t exclusively rely on a TMS though, to gain full visibility, shippers must build relationships with suppliers, carriers and logistics providers. These partnerships enable shippers to get real-time insights and a chance to optimize best practices.

There is a major savings potential when using a TMS. To operate efficiently and effectively, companies need visibility into their entire supply chain process – including inbound freight.

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3 Steps to Cut Inbound Transportation Costs

Inbound freight management is multifaceted. A large manufacturer could have hundreds of suppliers, and a national retailer can expect business partners to deliver shipments to thousands of facilities. 

42% of shippers refer to controlling costs as the greatest challenge with inbound freight management.

Transportation rates are rising; shippers report higher base rates, additional accessorial charges and higher premiums on expedited shipping. Businesses are scrambling to control costs and find logistics solutions that effectively manage these expenses.

Managing inbound freight means warranting an efficient and cost-effective movement of raw materials and goods coming into a facility. The Aberdeen Group estimates that 40% of the average organization’s annual freight budget is spent on this process.

“Cost is what everyone goes after, and improving inbound freight management yields a significant opportunity to reduce costs. Companies also see service improvement,” says Robert Murray, REM Associates.

Best practices to cut costs and improve processes:

  • Identify vendors and gain visibility into costs. If your suppliers are in control of inbound freight moves, you might be paying extra – it’s likely your suppliers bundle shipping services into product prices and use the service as a profit center.Taking control of inbound freight moves grants you visibility into true transportation costs, as well as the ability to optimize freight moves.
  • Negotiate. An estimated 75% of inbound shipments are routed to facilities via LTL. Shippers can avoid paying high LTL transportation rates, by leveraging the Czar Lite Tariff, utilizing guaranteed service levels, requesting a discounted fuel surcharge and highlighting attractive freight.
  • Optimize the Process. Take advantage of your TMS software – use custom reports to see if your inbound LTL freight can be consolidated into one truckload shipment; this reduces congestion at the dock and minimizes hours of labor. Use the technology for monitoring safety, insurance and performance, and tracking and tracing shipments.

An efficient inbound freight process benefits all parties. Reduced costs, administrative competence and better inventory management are 3 of the key benefits to managing complex inbound freight processes.

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Need help improving your inbound process? Click here to contact an inbound freight management specialist at PLS Logistics Services.

6 Facts about Inbound Freight Management

  1. Inbound freight accounts for an average of 40% of total freight spend, and 90% of shippers say they are not prepared to manage inbound freight. 
  2. Over 80% of companies have inbound freight.
  3. 75% of companies report that inbound freight management is a key focus.
  4. Not controlling inbound transportation means you are most likely being overcharged.
    • “Buy Delivered” means the cost of transportation is included in the cost of the product. You don’t have to worry about choosing and managing the carrier, and you can blame the vendor if any problems occur.
    • Problems with the “Buy Delivered” method:
      • You don’t know when the product shipped
      • Don’t know the mode or specific carrier
      • No tracking information
      • You cannot properly schedule receiving
  5. Companies that control inbound freight eliminate inefficiencies of inbound flow, supplies, equipment and information. Managing inbound freight reduces freight costs and maintains on-time pickup and delivery.
  6. Suppliers risk losing customers if inventory/parts cannot be supplied as needed.

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Case Study: How to Reduce Inbound Freight Costs by Tens of Thousands of Dollars

PLS Logistics is partners with a consumer goods manufacturer which has multiple locations. The client sells products to major retailers such as Walmart, Ace Hardware and Lowe’s. The company’s annual freight spend is a few million dollars. 

When the client was pressured by its retailer buyers for lower costs, they needed to optimize transportation management to find cost savings. The client felt they could decrease overall transportation spend, but they had no visibility into the shipping processes and could not identify any inefficiencies.

PLS assessed the consumer goods manufacturer’s transportation functions and found several problems, which included:

  • Widespread dysfunction in the decision-making process
  • Manual logistics functions and overwhelming paperwork
  • Poorly managed LTL freight movement
  • Fragmented carrier base, missed deliveries
  • All focus was on outbound freight, inbound freight was ignoredPLSPRO.png

PLS suggested numerous solutions for the manufacturer. First, PLS integrated PLS PRO with the customers ERP to gain visibility into transportation processes. Then, PLS put an inbound vendor management strategy in place to cut costs and optimize freight moves. PLS worked with the company and its carriers to address delivery performance, scheduling and lane analyses. The carriers were given tactics to quickly fix errors when they occur. PLS developed and implemented a solution eliminating manual freight payments and audits; adding a monthly reporting process in order to give the CFO information on growth and savings.

In the end, PLS met all of the customer’s needs for monetary and time savings:

  • Improved claims processing and settlement
  • Streamlined carrier management and sourcing
  • Opened new opportunities throughout the supply chain
  • Implemented new programs (inbound, drop trailer)

The client saved over 500 man hours through automated billing processes and an integrated TMS. The company saved $36,000 on inbound freight alone and achieved 12% savings on outbound transportation. Total transportation savings amounted to over $284,000.

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