How much do you spend on inbound freight shipping? Many companies don’t know how much they actually spend on inbound transportation. In most cases this is because they order their products “vendor prepaid” rather than “inbound collect” (see figure below). This means the supplier provides a combined price for the product – plus any related shipping and handling costs. In these cases, the supplier has no incentive to reduce transportation costs, avoid expediting freight, or source products from origins with lower transportation charges. On top of that, many companies don’t have visibility to inbound flows. That lack of visibility negatively impacts their ability to manage inventory, as well as costs.
By taking control of inbound freight shipping, businesses can separate product costs from freight shipping costs in order to gain more control. They can prevent suppliers from making a profit on freight (through the “prepaid-and-add” model), gain visibility to their freight shipments, reduce inventory, and see when shipments will arrive. When you control your inbound freight shipping, you’re also in a better position to reduce the number of carriers delivering your freight (which may help with dock congestion issues), and possibly even consolidate orders into larger shipments further reducing your transportation expenses.
Not sure where to start? Here is a quick, three-step process for getting control of your inbound shipping expenses:
- Look at one or two invoices from your major suppliers. See what dollar amount they allocate for “shipping and handling.”
- Compare your suppliers’ freight shipping rates with the rates you have in place with your preferred shipping provider. If you work with Logistics Plus, we can do the analysis for you.
- If you find your rates are lower, draw up a “routing letter” for your purchasing department to forward to your suppliers providing details on how you want your products shipped. If you work with Logistics Plus, you can request that all suppliers contact us directly to ensure your inbound shipments are routed in the most cost-effective manner.
If you’d like Logistics Plus to help you analyze your inbound transportation, or serve as your inbound routing center, please contact us and let our talented and caring logistics experts go to work helping you gain control of your inbound freight shipping. We provide affordable, award-winning managed-transportation solutions to both large and small businesses all around the world.
