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Although not a new concept, inbound freight management should be a key component of every company's supply chain management strategy.
Supply chain journals, editors, consultants and software
providers would lead you to believe that inbound freight management
programs are a brand new initiative that they are "hot on the trail"
of mass implementation.
The truth is, that these programs have existed since the Motor
Carrier Act of 1980, also known as deregulation. The staff here at
Next Generation Logistics have been implementing these types of
programs since 1980 and are well known experts in this area.
A Well Travelled Path .... But Also An Opportunity !
If your organization is currently evaluating such a
program, you are in luck, because chances are that there have been
many companies that have proceeded you in implementing such a
program thus lowering resistance to change.
Outline of an Inbound Program
The basics can be broken down as follows:
- Purchasing Information - Who are the vendors you are buying from and what are their product release points(sourcing), how often do you buy the products (frequency) and how much are you paying for freight (cost) to have them delivered into your company.
- Market Freight Rates - Once you establish the various sourcing traffic lanes are, you will need to identify and establish your own market freight rate for each of those lanes whether it's from your own carrier RFP or already existing tariffs.
- Analysis - The next step is relatively simple, which is using an Excel Spreadsheet, simply calculate the difference between the vendor supplied freight expense and your own established freight rate by origin traffic lane. A positive variance will show that you can save money on arranging the freight yourself. A negative variance will tell you that you are better off letting the vendor continue to ship it to you and/or your quoted freight rate is too high or the vendor's allowance is too low.
An inbound freight management program can yield tremendous financial returns on your investment if properly implemented. Feel free to call us to further discuss your options.
