Taking Control of Inbound Transportation: Change You Can Take to the BankApr 1, 2013
Freight costs appear to be on a never-ending upward trend. Manufacturers, retailers, wholesalers, 3PLs and just about everyone else is feeling the negative effects of rising logistics costs. But while most companies recognize the importance of optimizing outbound freight spend, many shippers are falling short when it comes to driving costs out of their inbound transportation.
Depending on the industry and business model, up to 35% of transportation costs are associated with inbound freight. Taking control of your inbound transportation can have a significant impact on supply chain costs. Why aren’t more companies owning and optimizing their inbound freight? For some firms, the obstacles to moving from prepaid to collect appear daunting:
- Uncertainty around the product and transportation buying power needed to successfully make changes.
- Lack of support within the Transportation department.
- Entrenched Purchasing or Procurement departments that are unwilling to unbundle product and freight costs.
- Lack of a clear business case outlining the business case for an inbound transportation initiative.
- A physical logistics network that isn’t optimally configured to take advantage of inbound opportunities.
- Potential change to your core transportation providers.
- Lack of systems designed to support planning and execution of sometimes complex moves like backhauls, continuous moves or consolidation.
While there’s no doubt that taking control of inbound transportation brings complexity and risk, the path to realizing the potential cost savings can be cleared through inter-departmental communication of the opportunity / business case as well as carefully considered change management. Here are a few tips for successfully managing the cross-functional change required:
- Initiate dialogue with your counterparts in Purchasing and Merchandising to find out if you have willing partners.
- Work collaboratively with all stakeholders and executives to understand what could be in it for them, creating an incentive to participate.
- Leverage corporate-wide initiatives to reduce costs.
- Develop an air-tight business case highlighting potential savings and the detailed changes needed to realize them.
- Take the time to understand the dynamics among key internal players and constituencies.
- Craft a communication plan to support the project and leverage it consistently.
- Consider best practices in change management as well as inbound conversion.
- Fully understand all foundational requirements like technology before attempting a complex inbound conversion.
By taking a cross-company approach, clearly articulating the business case, and carefully managing change, your company can realize reduced inbound transportation costs and gain a competitive advantage.
Need help with inbound transportation planning? Contact us! (201) 940-7311.