One can view a supply chain as a series of processes. From inbound freight management, the process of picking up raw materials, to last mile delivery, freight management is a group of practices and procedures that, when performed well, are seamlessly integrated to ensure a company’s goods, arrive on time, at the right place, damage free. Best in Class shippers have tight processes that perform each of the following activities in a highly effective manner.
• Inbound Freight Management
Often overlooked and underappreciated, strong inbound freight management processes allow shippers to leverage the full volume of their shipping activities in their carrier rate negotiations. They ensure shippers treat this as effective means of expense management rather than as a profit center for their vendors. When done well, inbound freight management permits shippers to create round trips and continuous moves to improve network optimization and reduce costs. They ensure inbound materials arrive in the right qualities at the right time at the lowest cost possible.
• Shipment Planning
As customer orders are received, shippers need to be able to look at the total volume of freight moving to specific customers and geographic areas and the service levels required so they can make intelligent business decisions. They need to be able to determine if orders can be consolidated, if alternate modes (e.g. intermodal versus truck) or service levels (e.g. regular ground, next day by noon etc.) would meet the customer service requirements at a lower cost. Rather than a stimulus-response reaction to customer orders, effective shipment planning incorporates a set of business rules into the execution of these processes.
• Carrier Selection
In this era of driver shortages and tight capacity, it is essential for shippers to create and maintain a robust routing guide. To do so, shippers should conduct a quality RFP every year and supplement it with mini bids and spot requests as new customers and lanes of traffic come on board. To learn more about conducting an effective freight bid, check out my series of blogs on this topic.
• Transportation Management
Shippers need to maintain tight control over the delivery of their goods. It is essential that effective processes are in place to ensure:
- shipments/loads are picked up and delivered on time,
- appointments are made to minimize unloading time, potential trailer detention and late delivery penalties,
- when possible, shipments are consolidated en route,
- the freight arrives intact and free of damage,
- customers are notified of late deliveries, if and when they occur and
- carrier invoices are correct.
A supply chain is only as strong as its weakest link. Shippers should maintain efforts to practice continuous improvement and make adjustments each year to ensure their processes get better on an ongoing basis.
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