The answer is YES! Inbound logistics cost is the hidden culprit when it comes to transportation cost. In simple words, transportation of items from vendors is where all the money goes. Misconceptions around inbound logistics are to be blamed for the same. On the brighter side, rapidly growing technology is challenging the perception and companies have started to see the importance of having a strong inbound logistics program. Why is a good inbound logistics program important?
Let’s assume you go to the market and buy a product. When buying that product, you’d be aware that the MRP printed on the product contains the profit of not only the manufacturer but extra costs of transportation, taxes etc. are also added in it. Same goes for the vendors. Vendors are businesses too and like any other business, they keep some profit for themselves. So the best carrier rate for them does not reflect the best rates for your company. The vendor may or may not disclose the lower rate turning the inbound system into a revenue stream and costing your company extra money.
However, with real-time data in an inbound logistics program, your company can ensure that vendors are using the lowest-cost carriers as defined by your service level agreements with the carrier, not the vendor.
BETTER VISIBILITY, MORE ACCURACY
A good inbound logistics management program offers better visibility which results in better inventory management. The visibility and control given by a good inbound logistics management plan can prevent:
With the accuracy it provides, you can not only maximise but optimize your warehouse space while providing an undisrupted flow of products to your customers.
BETTER CUSTOMER SERVICE
Needless to say, a good inbound logistics management program result in increasing customer service capacity and satisfaction. Faster and better deliveries make people more likely to repeat purchases in future. The more products purchased means increased overall business which further means a big boost to your company’s image and profit!
We already know that vendors are supposed to stay in compliance with the rules laid out by the inbound logistics vendor guide but we also know that 100% control over vendor’s actions is not possible. Here is where an effective TMS that includes a vendor module comes to the rescue. It helps to eliminate this risk and returning control over to entire supply chain and hence resulting in cost savings.