When you're trying to keep your supply chain costs competitive and still retain an ever-increasing need to compete for visibility and customer satisfaction, you probably feel like you’re doing the equivalent of standing on one foot while juggling fire…blindfolded.
Assuming you’re not a professional juggler, it’s easy to understand why other things are often neglected in your business process. One such thing: inbound freight management.
With rising transportation costs now is a better time than ever for shippers to take an in-depth look at how they may be able to better manage inbound freight, spend less, and become more efficient. Here are 5 reasons you should have a third-party logistics (3PL) provider manage your inbound freight.
1. Streamline the process
Have you ever seen that one chocolate episode of the classic TV show, I Love Lucy? You know, the one where she has to keep up with the chocolates coming out on the conveyer belt? (If not, spoiler alert: she can’t.) Well, that’s what running a business is like without a streamlined process. This is one of the toughest challenges concerning inbound freight operations.
When your process isn’t streamlined, you likely won’t be able to keep up with orders in an efficient manner, ultimately creating issues with delivery and fulfillment operations. Customers are lost when expectations aren’t met. But by utilizing a 3PL-partner you can electronically release purchase orders to vendors in real-time so that they are taken care of the right way – and right away.
2. Leverage inbound and outbound spend together to get a better deal
Your inbound spend goes towards bringing you the products or materials that you need to create and sell a finished product. Alternately, outbound spend goes towards the transportation, storage, and delivery systems that deliver your products to your customers.
A 3PL has access to the necessary resources and a powerful logistics network that can save you money while optimizing your operations. Just as with any other negotiations process, a 3PL, which has spent years developing relationships with carriers, can leverage your inbound and outbound spend together to get you a better deal.
3. Control the routing of freight
3PL-partners can utilize special software to track and route warehousing and logistics operations. From dealing with constraints such as load capacities to time windows and multi-modal deliveries, 3PLs are able to create optimal, dynamic transportation that best suits the interests of your business. Using the right technology, a 3PL can even automate the routing process to route orders to the optimal fulfillment center, taking into consideration both speed and cost. Through this process, your freight routing will become more efficient and effective – likely saving you time and money.
4. Give visibility to buyers
Consumers have come to expect real-time tracking information about their purchases. For smaller businesses, it can be difficult to build an enterprise-level tracking system, but a 3PL can help to provide other capabilities that can be leveraged. Breaking fulfillment promises you make to customers can actually damage your brand. With a 3PL you are able to manage end-to-end delivery in real-time, allowing your buyers to log in to their accounts and keep track of where their shipment is, which can create realistic (i.e. helpful) expectations. If you have internal access to the 3PL’s tracking system, you will be able to provide this information to customers over the phone as well, which provides more opportunities for cross-selling and upselling.
5. Best possible cost on the product you’re buying
A business’ inbound freight is usually prepaid for by its suppliers, who often take advantage of the opportunity. When suppliers prepay for their shipments, they often add a markup of somewhere between 10 percent and 60 percent (we call this Prepay and Add). Sure, this can help them to recover some costs, but let’s be honest: it’s really a way for them to profit from your transportation costs. Often these markups are added into the cost of the product and therefore hidden.
Between selecting their preferred carriers to shipping at times that suit their needs (not yours) suppliers use the opportunity to gain many advantages. While freight may be a smaller part of your invoice, it may be creating a larger portion of their margin.
That’s where a strategic 3PL can come in quite handy. You can avoid these markups by outsourcing your inbound freight management rather than going through multiple vendors. Your 3PL Partner can offer transportation services through its array of asset-based carriers to ensure that you are no longer dealing with unjustified added fees.
A 3PL gives you the ability to negotiate the price just for the product since the company you work with will use the same pricing program for all shipments. By consolidating the number of carriers you are using, you can reduce your overall cost.
Looking for the Right Provider and Get your Inbound Program until Control
Inbound freight management isn’t just something that larger companies utilize – it’s for small manufacturers too. By incorporating a well-thought strategy into it you will provide your end-customers with faster service and lower prices. And since this makes your buyers happy, it’s a win-win for everyone.