Inbound freight management often does not receive the attention it deserves. Short supply chain budgets, increased visibility needs, and a competitive market for customer satisfaction are putting pressure on many shippers.
As transportation costs continue to rise — and eat more and more of shippers’ supply chain budgets — it’s time shippers take an in-depth look at their inbound freight and how they might better manage it to save money and gain efficiencies.
First up: relevance. You have your suppliers rolling in just fine. You’ve got established relationships. Sure, you see delays and claims and occasionally think that maybe there’s a better carrier out there.
Why is taking a closer look at inbound freight worth the time and risk of possibly ruffling all your business’ established practices?
Because the fastest way to save money on your transportation costs is to take control over your inbound freight. Too many suppliers and too little time? Consider partnering with a strategic 3PL to access their logistics technology, data analysis, carrier network, and management experience to speed up your ROI.
Traditionally, a business’ inbound freight is prepaid by their suppliers. This gives suppliers the advantage. When the suppliers prepay for their shipments, they add a little markup — anywhere from 10%-60%. This serves to recover some of their costs, but it can also create a profit center for the suppliers.
Some suppliers may negotiate markups; others are added into the product cost and essentially hidden. The best way to spot markups? Look for costs from your suppliers that aren’t line-itemized.
Suppliers may use their control of shipping as a catchall to gain other advantages that don’t serve you. These could include selecting their preferred carriers, which might unnecessarily inflate your bottom line, and shipping at times that keep their dock moving smoothly but yours congested.
When you are buying products and get an invoice that includes freight cost — but those aren’t broken out as line item — start there. With numerous vendors marking up prepaid freight costs 10%-60%, you are looking at a big opportunity to save. But you’re also looking at piles of invoices from multiple carriers. Maximize your savings and access them quickly by outsourcing your inbound freight management to a strategic 3PL.
The right 3PL will manage your supplier relationships to ensure they are shipping according to your requirements. This means no more unjustified markups padding your freight costs, plus more resources focused on streamlining freight shipping for all parties.