Benefits of an Inbound Transportation Management Services Program
No one would consider driving a car with a blindfold, but that is exactly what many companies do today with their inbound supply chain.
A great deal of importance is placed on the outbound supply chain, but an often overlooked opportunity exists within a company's inbound supply chain.
Procurement, order optimization, visibility, improved KPI’s, controlled process and vendor compliance are drivers of an inbound supply chain process that if montitored and controlled will decrease safety stock; lessen warehouse requirements; lower transportation costs through a dynamic inbound compliance routing guide; reduce transportation expense from volume discounts, consolidation and pooling opportunities; increases revenue and customer satisfaction with less stock outs; decreases overhead; and increases productivity.
Summary of the Enterprise Benefits of a Transportation Management Solution
As the above diagram illustrates, the inbound supply chain is complex with a series of numerous moving parts, players, objectives, compliance issues and synchronization challenges. Vendors try to simplify the process for their organization by providing a landed cost for their products, which is code word for vendors are adding a substantial profit margin for freight and burying it in the total cost of the product.
Some companies try to address their inbound challenges through routing guides, but these static guides are not well followed by the vendor community and the documents do nothing to address the real-time visibility and efficiencies that can be obtained through a full service program. Third party logistics service providers (LSP's) have moved up the food chain and offer high tech, specialized inbound transportation management services programs to clients to synchronize, control, optimize and improve the procure-to-pay process.
Through a LSP’s transportation management services program, all stakeholders have the information at their fingertips via a single web-hosted platform that allows them to communicate in a collaborative environment. Purchasing, Vendors, Carriers, Accounting, Receiving and Traffic exchange information collaboratively to optimize how product enters into their operation and is transferred into a saleable state to quickly improve the order to cash cycle.
Initially, clients go into these types of outsourced transportation management programs for the hard and soft cost savings that are advertised, but find the service and flow of information takes their inbound supply chain and their whole order-to-cash cycle up several notches and produces a world class supply chain that provides a competitive advantage over their competition.