EYE ON LOGISTICS BLOG

4 Reasons to Focus on Supplier Compliance in Inbound Freight Management

Jason Mansur

23 January 2019

Turning your attention to supplier compliance can help you cut hidden freight costs, optimize shipments, ease supplier communications, improve visibility, and more.  

It pays to focus on inbound freight — and the suppliers that are shipping it. While your suppliers’ shipping practices may seem fine, better management for supplier compliance virtually guarantees reduced costs and improved efficiency.  

Supplier relationships can be delicate or complex. But examining your suppliers and their practices is an important step in improving your inbound freight program.  

Let’s take a look at how supplier compliance can impact your business. 

4 reasons to focus on supplier compliance   

1. Cut padded freight costs.  

Your inbound freight often comes with a hidden markup — suppliers who prepay for shipping can add 10-60% of actual shipping costs to your bill. Luckily, it’s relatively easy to identify the markup if you know where to start. Our tip? Inbound freight management starts in the purchasing group.  

When your purchasing group is buying products, they receive freight invoices from your suppliers. When those invoices indicate that freight is included, but it’s not a line item, you’re onto something. That lack of detail may hide a markup or non-competitive rate.  

Taking control of your inbound shipping allows you to cut out padded freight costs and select carriers tailored to your shipping needs. It clears up communication between you and your suppliers by streamlining the purchasing process.  

2. Increase visibility into your shipments.  

Better supplier management increases the visibility of your freight. With increased visibility, you can drive down costs.  

For example, you might see that you have suppliers shipping to the same origin and destination via several LTL shipments. Instead of using separate LTLs, your suppliers could group their shipments together and ship once or twice week. By consolidating shipments and developing new schedules, you can reduce the overall costs.  

Another example of cost savings through visibility is finding flexibility in supplier schedules. We can work with your suppliers to get approval for strategic, cost-beneficial openings, like earlier or later shipments.  

Everyone is looking to save money. By optimizing your shipments, you are reducing the suppliers’ costs and your costs. With these savings, you gain the ability to make strategic decisions, like reducing your internal costs or passing cost reductions on to your customers.  

We consistently see suppliers making easily correctible mistakes that cost you time and money.

3. Ease and improve supplier communications.  

With inbound freight management, we have the ability to help your purchasing department improve supplier compliance and communication to recover costs. This happens on a daily and long-term basis.  

In the day-to-day, for example, we can smooth out situations where your supplier is not using the most cost- and time-efficient carrier for your needs. We also can work with your supplier to communicate carrier needs and overall improvements.  

This all sounds pretty simple. But we consistently see suppliers making easily correctible mistakes that cost you time and money. Here are two common issues:  

  • Not following instructions on purchase orders – When we are handling inbound freight, we carefully manage communications on what the supplier needs to do.  
  • Ongoing supplier compliance – We work with the supplier to enter the purchase order correctly into your system, with the carrier we specify — every time — through hands-on training. (More on that later.)  

4. Educate your suppliers.  

A 3PL can operate as the go-between to ease supplier communications and, perhaps even more importantly, educate suppliers. We offer onsite supplier training and often will travel to all suppliers in a region for clients.  

To prepare the trainings, we analyze your shipping data to narrow down to what your supplier’s specific problems are with your shipments. Generally, we focus on things like freight misclassification and fewer accessorials.  

  • Misclassification is common and can easily add up into significant costs that you are absorbing from your supplier’s mistakes.  
  • We look to reduce accessorials to only those you absolutely need and to educate the supplier accordingly. Fewer accessorials means less to negotiate and, ultimately, fewer problems.  

We provide access to a custom online shipping portal and train your suppliers how to use it for your shipments. We can also provide a push to suppliers to get the details correct.  

Sometimes suppliers want to call in purchase order information, which slows down the process. Our customers may choose to impose a small fine on suppliers that don’t enter information into the online portal. We strive to add value to the supplier experience and make it to where they want to enter data into the online portal.  

Focusing on supplier compliance offers more than just cost savings.

Examining supplier relationships can be a huge task. If you’ve tapped a partner 3PL for a fully managed inbound freight solution, supplier compliance may represent a large piece of the work. (Just make sure your 3PL is reporting to you on supplier compliance.) But it’s worth it.  

Putting resources into supplier compliance virtually guarantees a return. It also shores up some of the most common problems that you are probably facing with your suppliers. Think of all the opportunities for improvement in your relationship in terms of communications, visibility, and more.  

It’s time to take a closer look at your supplier relationships and see what opportunities for improvement await you. 

Jason Mansur

Jason is Evans Transportation's Chief Operating Officer.

ebook-getting-logistics-a-seat-at-the-table

Shipper’s Guide: Getting Logistics a Seat at the Table.

You can’t afford to run your logistics program on autopilot anymore. This guide makes the case for logistics as a major center for cost-savings and customer satisfaction.

Get Yours Now

Subscribe to our Blog