Where cost reduction and optimization are concerned, outbound shipping usually takes center stage. Inbound sits in the background, unmonitored and unexamined. Though they may be harder to gain control of, inbound shipping costs can be a significant source of efficiency and savings. Here are three ways businesses can keep them in check.
Data, Supply Chain Visibility, and Standardized Processes
Low supply chain visibility is a hazard in today’s business environment. It leads to wasted time and wasted money through unnecessary inefficiencies and excess costs. Do you know how your locations handle, track, and record inbound shipments? Is there one standardized process guiding this effort? In both cases, the answer should be yes. Data is critical, specifically data that concerns where shipments are coming from and where they are going. Having processes in place to both gather and analyze this valuable information is the first step to identifying cost-saving opportunities.
Make Procurement & Logistics Talk to Each Other
Consolidation is a significant source of inbound cost saving. In general, single large shipments cost less than many small ones. For consolidation of inbound shipments to happen, there needs to be collaboration and communication between departments. Procurement is often disconnected from transport and logistics by different goals and mandates. When this happens, inbound shipping cost minimization can fall through the cracks. Increasing communication and collaboration between these two departments can lead to better planning efficiencies and greater cost savings.
Get Accounting and/or Finance Involved
So, you now have excellent supply chain visibility, a ton of data, and your procurement department is best friends with your logistics department. It’s time to get accounting involved. They’ll be able to take a look at the data and determine which costs can be controlled and which ones can’t. They’ll also be able to enhance monitoring by placing all itemized shipper charges under one freight code. It should be noted, though, that many suppliers bundle shipping costs into the product price. Because of this, the billed amount should be compared to the true merchandise cost. In cases of significant discrepancies, consider retaining a third party logistics provider (3PL). Such firms are well placed to negotiate with carriers and suppliers to lower shipping costs. 3PLs are also a great alternative for those lacking the resources to support a comprehensive inbound program. They can tailor inbound solutions for your business, and, thanks to their experience and relationships with carriers, help you achieve enhanced savings.