Inbound Freight Management:
Businesses are increasingly realizing the good sense – and good economics – of taking control of the transportation logistics for all inbound materials. The concept took center stage last year, when Wal-Mart announced plans to take control of its inbound transportation.
What exactly does this mean? In its most basic form, if your business relies on several different vendors to supply inventory of goods and parts, then you know that you are generally at the behest of those vendors’ transportation providers to get those goods delivered on time. And you are also forced to take it on good faith that your vendor has negotiated a good rate with that carrier, since you will be the one picking up the tab.
With an inbound freight program, all that changes. Your business assumes responsibility for transporting all inbound goods. You select the carrier, negotiate the rate and determine the schedule.
The obvious benefit is to free your business from shoddy service or exorbitant fees from a carrier that you did not choose. And, it allows you to centralize the logistics function, thereby giving control for all inbound shipments to a single source. With centralization, comes greater leverage in negotiating rates and service guarantees.
Developing an inbound freight program also gives you a chance to start with a clean slate — to create a logistics strategy that works best for your business. And, with logistics carriers increasingly offering “out of the box” solutions, it’s a great opportunity to upgrade your supply chain components.
Some solutions that you may want to consider incorporating into your logistics plans:
Intermodal: Does it make sense to incorporate a rail or air component into your transportation plan?
DC Bypass: Is it necessary for a shipment to make a stop at a distribution center, especially if your carrier has the capacity to travel directly to its end destination?
Backhaul: What about taking advantage of the trucks leaving your facilities, and use them to carry shipments to customers or elsewhere in the supply chain?
Consolidation: A centrally managed transportation program allows you to coordinate inbound shipments coming from multiple vendors, so that LTL shipments can be consolidated, and efficient routing can be ensured.
Service Guarantees: At a time when the logistics industry is still reeling from recession-induced capacity cutbacks – and when a March 2011 survey found that 77 percent of shippers expect to see very tight or somewhat tight truckload capacities — an inbound management program will allow you to lock-in service guarantees with a carrier.
What is your business doing with their inbound freight strategy? Have you developed programs that improve efficiencies?