Most companies already know the advantage of gaining control over outbound freight costs—low-hanging fruit for anyone wanting to save on their transportation spend. What is much rarer, is the company that understands the value of and takes control over their inbound shipping. Because inbound is mostly the responsibility of the purchasing department, quite often, it is just simpler to trust their vendors and carriers to choose the best freight option and “not get into it.” In an era of calculating labor and raw materials down to seconds and thousandths, for many, inbound freight has somehow slipped through the watchful eye of cost analysis and is simply “added in” to COG and not managed in COG. But just like any other cost, inbound that is not controlled, ALWAYS costs more than necessary.The truth is, nobody is going to care about your inbound freight costs unless you do.
The Difficulty of Managing Inbound Freight Costs
For decades, inbound freight costs have lived in relative ambiguity, neatly tucked away in invoices or built into the cost of raw materials. Rarely challenged and even less often, controlled, inbound freight has been lost in the supply chain and is often simply line-itemized as a percent of raw materials cost—inaccurate at best. In other words, inbound freight costs are possibly the last frontier in cost-control because few have taken the time to demystify it, attack it, and manage it.“…like any other cost, inbound that is not controlled, ALWAYS costs more than necessary.”
Inbound Control Demystified
So how, in this era of controlling material and labor costs, has inbound freight somehow gotten a pass? The reason: most think it’s too difficult to control, and it is easier to assume the vendor and the carrier have the customer’s best interest at heart. Even in the most utopian business world, that is not very likely. The following are three big myths about inbound freight costs.Myth #1: “Company A” Solved Inbound Overcharge by Mandating Their Routing GuideThe Routing Guide is lots of work to maintain and is outdated the next day after it is completed. Typical Routing Guides are based on data that is 12-18 months old and were the best option for shippers to use in controlling their freight costs—twenty years ago. Today, not so much.Myth #2: “Company B” Gets Best-Pricing by Funneling All Freight to One CarrierWhile there is such a thing as volume pricing, there is no such thing as a single carrier (or even a group of two or three) having the best rates for every route and shipment. The only way to reduce overall freight costs is to evaluate shipping costs—for every shipment continually. Once upon a time, that was a difficult task.Myth #3: “Company C” Figures the Staff Time Spent Gaining Control of Inbound Would Offset any SavingsTwenty years ago, this was true. Today it couldn’t be further from the truth. Controlling inbound without professional tools is like mowing your lawn with hand clippers. It can be done, but there’s now a better way to do it. And herein lies the real secret to inbound control.In the past, the task of gaining control of inbound freight was slow and arduous at best. Efforts like Inbound Routing Guides were an attempt to gain some amount of control, but the reality was the keys to inbound were locked away, hidden from the eyes of shippers hungry to save on freight. “Controlling inbound without professional tools is like mowing your lawn with hand clippers. It can be done, but there’s now a better way to do it.”
Controlling Inbound Freight Costs is Easy with the Right Tools
In the last five years, logistics has become one of the most data-driven industries in the business world, but data that was still closely held by carriers and institutional 3PL’s. That is until a new breed of customer-centered Third-Party Logistics providers (3PL’s) changed the playing field for savvy shippers.Through their partnership with TForce’s TForce Worldwide, customer-centric 3PL provider Customodal is able to provide companies with pricing, routing, and transit information for up to 20 carriers simultaneously. We use an online portal where a shipment can be entered, evaluated, and booked in under two minutes. Customodal’s EXACT Program enables companies to gain near-complete control of all inbound with minimal training. The ability to control the most favorable cost/route/time options, gain near real-time tracking, audit past shipments, limit carrier options—all with the click of a mouse—enables purchasing departments to look more deeply than ever into their inbound costs.
Customodal’s EXACT: The Routing Guide for the 21ST Century
Perhaps the best feature of EXACT is that, just as the old Routing Guide was given to vendors to book freight, the EXACT portal is instead given to vendors for freight booking, enabling purchasing departments to maintain control over carriers. It removes the matter of having to deal with the daily booking of shipments. No additional staff time. Lower inbound cost. Exact numbers for COG. And more money to the bottom line thanks to better inbound pricing.
It’s Good to be EXACT
So the last frontier of precision cost control—inbound freight costs—can now be harnessed, understood, evaluated, and managed. True COG can now be fully known, a real-time (and lower) freight number can be line-itemized, and most importantly, the real cost of doing business with specific raw materials vendors can be compared and evaluated.With EXACT, purchasing departments can now know their numbers completely and with precision, enabling better purchasing decisions and lower COG.Customodal is a new breed of innovative 3PL’s primarily serving the Manufacturing sector with a full menu of Logistics services for over 15 years. For more information about Customodal and their EXACT inbound service, click Customodal.com or dial 800-445-6577.
About The Author
Mike is Founder and CEO of Customodal. Having a nearly 30 year history owning companies which provided asset-based ground freight, parcel shipping, air freight and charter flight services, Mike harnessed that knowledge into a Top-Tier logistics company when he started Customodal.
To read more about Mike, check out his full bio here.