There are at least five good reasons to adopt a strong inbound logistics strategy—to restore the balance of power between you and your vendors; to support carrier selection and negotiation; to improve inventory management; to reduce hidden shipping costs; and to improve quality control. Let's take a close look at each:
1. Restoring the balance of power
It's important to build and maintain strong relationships with your vendors. However, too often businesses cede all control of inbound logistics to their vendors, resulting in an unhealthy imbalance in the relationship. This is inevitable if the business lacks the inbound logistics system and strategy to manage and monitor the intricacies of inbound shipping. While ceding control of inbound logistics to your suppliers may seem like an easy short-term fix, it can put you at a severe disadvantage when it comes to keeping your own costs down; choosing delivery schedules that meet your needs; and perhaps most importantly, choosing carriers that work best for you.
2. Carrier selection and negotiation
Choosing carriers that you can consistently trust and afford is critical to a successful inbound logistics program. However, if your suppliers are choosing your carriers, you lose the opportunity to monitor and negotiate perhaps the most important and costly aspect of your inbound supply chain. On the other hand, with the help of a solid inbound logistics strategy you can make an informed decision to keep a given carrier; renegotiate your relationship with them; or choose to switch to a carrier that better meets your shipping needs. Although one might worry that this change in approach will upset your vendors, they may indeed welcome it, at least in the long-term, as they will no longer find themselves solely responsible for managing the weighty process of shipping logistics.
3. Improved inventory management
Adopting a comprehensive inbound logistics strategy will help ensure that you have the expertise and technology to consistently maintain the optimal stock necessary to meet your customers ever-changing needs. With a persistent bird's-eye view of all scheduled shipments, you will gain the ability to make granular adjustments to fine-tune the inbound flow of goods. This will help your team prevent both the overstocking that results in expensive returns, and the understocking that leads to lost sales. Furthermore, with the rich set of data an inbound logistics system provides, repeating shipping patterns will make themselves evident, allowing you to anticipate them and make any necessary changes.
4. Reducing hidden costs
Having a robust inbound logistics strategy can help you audit and reduce hidden or otherwise unnecessary costs associated with shipping and other aspects of your inbound supply chain. After your logistics team and technology has analyzed all of the costs associated with your shipments on a granular level, any overbilling or unreasonable hidden costs will become clear. Armed with the data, you can then seek changes, file claims, renegotiate carrier costs or select a more trustworthy carrier.
5. Quality control
An inbound logistics strategy will include an ongoing analysis of the quality of the entire shipping process along a number of key vectors. For example, if you're having a problem with late shipments, or suffering from an unacceptable level of damaged goods, your inbound logistics system will bring the issue to your attention. Furthermore, with an eye toward ethics and sustainability, if your shippers and suppliers are not holding themselves to the same high standard that your company has set for itself, you run the risk of an eroding reputation, or even loss of key certifications and licenses. Implementing a strong inbound logistics program, on the other hand, will make it clear if there is any disconnect between your standards and those of the other key contributors to your inbound supply chain.
There are dozens of distinct advantages that come with adopting a robust inbound logistics strategy. However, the following five advantages, outlined above, should provide a strong incentive to make a change: a better balance of power between you and your vendors; a stronger say in carrier selection and negotiation; a vastly improved inventory management system; consistent identification and reduction of hidden costs; and stronger quality control. Given these advantages, and a host of others, you may find that it's time to get started forging an inbound logistics strategy that will make a world of difference to your business and bottom line.
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