Most of the discussion around shipping and logistics focuses on outbound, but inbound freight also has a major impact on operations and costs. Inbound freight refers to shipments of raw materials and components that come from suppliers or vendors - basically the ingredients for a company to create its finished product. For its part, outbound freight is the movement of finished products to retail and consumers. Back to inbound freight though, as that's what we're focusing on in this piece. Inbound freight involves the purchase and receipt of needed materials and components - dealing with vendors and suppliers of these items. While it can consume in the neighborhood of 40% of a company's average annual freight spend, it's actually a component of a business that many overlook. Often, rather than logistics staff or a logistics service provider (LSP) having direct involvement in inbound freight management, the process is simply another function of the purchasing department. Vendors and suppliers make it easy to keep it that way by providing landed costs for their products, but companies pay for that ease with a substantial hidden freight cost incorporated into the price of the product. So businesses that neglect to implement an inbound freight management program - or do it poorly - are missing out on a potentially significant logistics savings opportunity - savings they can pass on to consumers. Especially while prices are generally up during inflationary times, a company may be able to hold them down a bit and make its customers happy by reducing inbound costs. It may seem daunting to start an inbound freight management program, but the advantages of doing it - and doing it right - are many.
Advantages of Inbound Freight Management
The advantages a company that manages their inbound freight process can realize are more than simply reducing the cost of freight and improving transits - even though those in and of themselves are worth it. They include:
- Reduced freight costs
- Improved supply chain key performance indicators (KPIs)
- Better resource management
- Shorten the Order-to-Cash Cycle
- Capital preservation
- Vendor relationship & management
- Improved dock management
- Improved supply chain reliability
- An atmosphere of accountability
- Positive, proactive communication for internal & external stakeholders
As discussed above, inbound freight is the lifeblood of a company. After all, without the materials and components required to make a finished product, there's no business at all. While setting up an inbound freight management program can be challenging, those many benefits are hard to ignore. And the advantages compound further when combined with an outbound logistics program under a single TMS platform.
How to setup an inbound freight management program
Setting up an inbound freight management program first requires a company to take stock of its current inbound product flow. Then, it's all about working with suppliers and the procurement team to craft a plan. The easiest way to accomplish these steps and get inbound freight management up and running effectively is through an LSP. At InTek for instance, we have a tailor-made inbound logistics service solution that offers:
- Visibility into inbound product flow
- Management of supplier compliance with POs & freight routings
- Improved timeliness of deliveries and service
- Optimized freight flows for reduced transportation costs
- Rapid implementation and minimal capital investment for quick ROI
- Best in class service leading to improved carrier relationships
- Scalable solution for your company's growth
- Maximized supply chain optimization & efficiency when combined with an outbound managed TM program
Interested in implementing our solution for your business, or just have more questions? Request a quote with us, and we'll get back to you to discuss your unique needs. Go to our Resources page to learn more about everything freight and logistics. Additionally, visit our blog for information and updates on the freight industry. Or start with these links below:
- Domestic Freight Services: Intermodal, Truckload, LTL
- Outsourced Managed Transportation Service Solutions
