Lower Freight Costs With Deeper Inbound Supply Chain Insights

Written by Paul Forand
     

Integrate-Shipping-CostsWe like to talk about how freight expenses are one of the most-controllable costs in a business, but have you considered how this is also true for your own inbound suppliers?

Shipping is a burden that everyone within a manufacturing ecosystem has to deal with.  The price of freight for first-stage raw components and materials will ultimately contribute to the final price that customers pay for the completed product.  More-efficient component shipping improves your own prices, and can potentially help your suppliers in their business as well.

Shipping is one of the areas in business where cooperation and collaboration is the best policy.  Anything that can be done by one member of a supply chain to improve\optimize their shipping processes will ultimately benefit everyone in that supply chain.

So, by using data-driven methods such as those afforded by TMS platforms, you can potentially improve the services offered by your suppliers, which can cut your costs and (usually) build rapport with them in the process.

Three Ways Data-Based Insights Improve Your Upstream Supply Chain

1 - Find opportunities for consolidated ordering.

This is often one of the quickest and easiest fixes.  It saves you money, as well as reduces workload for your suppliers.  If there are any cases where you're placing many small orders, these can possibly be converted into bigger bulk orders at cost savings.  Your supplier\carrier may be able to offer discounts (sometimes even free shipping) while freeing up more cargo space for themselves.

This isn’t limited to manufacturing components.  Think of something as simple as branded office pens.  If every department\office is ordering pens individually, this is almost certainly less efficient than a single company-wide bulk pen purchase.  

2 - Discover weak points in the chain.freight-shipping-cost

With a robust data-collection system, you may actually have insights into your vendors' supply chains that they lack themselves.  Spotting these weak points can improve the services you receive, as well as garner goodwill.

As an example, suppose you're analyzing reports of damaged components and discover that a high majority of them are all passing through one particular terminal or depot.  There's a chance that even the supplier isn't aware of this!

So, rather than calling the supplier to complain, call to tell them about the data and offer to send over a copy.  If they concur, they'll almost certainly take action that will improve your business and theirs.

3 - Implement parallel systems to share data.

Going a step further, it's becoming increasingly common for vendors, manufacturers, and carriers to all share their data through linked systems, specifically for optimizations. With you and your suppliers on the same page, information can flow more freely.

Need more help with your shipping operations? Contact ReTrans Freight today for a complementary process analysis.