A PUBLICATION OF CERASIS

The Essential Guide to Inbound Freight Management

TABLE OF CONTENTS

1

2

Introduction

Best Practices

Technology

Conclusion

INTRODUCTION

We introduce you our newest ebook, The Essential Guide to Inbound Freight

Management.

Inbound freight management is receiving a lot of attention as businesses continue to

look for ways to manage shipping costs.

If you’re looking to save costs on shipping, take a look at inbound shipping. Depending

on the industry and size of the company, a business can spend more than 40% of its

annual freight budget on inbound shipping, according to the Aberdeen Group, a research

firm in Boston. A more efficient inbound freight program can minimize delays, save

money and even reduce confusion.

75% of companies surveyed by the Aberdeen Group report that inbound freight

management is a key focus point & Total freight spend is between 3.6% and 5.2% of

surveyed companies’ total sales, according to Aberdeen’s results. In this all new e-book,

shippers will take away an understanding of inbound freight management to reduce

costs, increase control, and gain more visibility into the front end of the supply chain

function of transportation.

We hope this e-book aids you in your quest to better manage inbound flows, vendors,

and reduce overall costs. If you need an expert partner to set up a turn key inbound

freight management program, turn to Cerasis technology and services to get further

ahead with your inbound program.

INTRODUCTION

Chapter One

Best Practices

The Top 6 Reasons to Have a Good Inbound Logistics Program

Most transportation costs in a company arise from inbound logistics cost. If other

words, the costs associated with transportation of items from vendors make up the

biggest portion of will transportation costs, reports Amy Roach Partridge of Inbound

Logistics. Part of the problem lies in misconceptions around inbound logistics,

including manual, data-intense processes and added stress. However, modern

technology is changing the perception, and the importance of having a strong

inbound logistics program cannot be overstated. In fact, let's take a look at the top

reasons why.

1. Real-Time Data Promotes Use of Lowest-Cost Carriers.

Vendors are businesses too, and like businesses, they are in it for themselves first. If

vendors retain control over all inbound logistics processes and selections, the best

carrier rate for them may not necessarily reflect the best rates for your company.

For example, if a vendor has negotiated a lower rate with company A, they may not

disclose the lower rate and bill you for the carrier’s current marketed rate. Therefore,

the vendor can turn inbound logistics control into a revenue stream, with your

company footing the extra costs.

Real-time data into an inbound logistics program helps your company ensure vendors

are using the lowest-cost carriers as defined by your service level agreements with the

carrier, not the vendor. In addition, you can use an inbound logistics program to

reduce higher-cost shipments through freight consolidation and backhaul shipping,

opening the door to even lower rates than you have previously negotiated with your

carrier.

2. Better Visibility Leads to Effective, More Accurate Inventory Management.

Better visibility through an inbound logistics management program promotes better

inventory management. If existing safe stock or expected shipments are identified and

seen throughout your company, you can work to provide safeguards against possible

delays. Furthermore, the visibility into inbound logistics helps to prevent cases of

overbilling, overstocking and understocking. Thus, you can maximize and optimize

your warehouse space while providing an undisrupted flow of products to your

customers.

3. Immediate Notification of Delays and Status Updates Eliminates

Uncertainty.

Delays and unforeseen circumstances do occur. An import may be held at the border

for inspection, or weather may cause delays along a common route. Rather than

leaving your incoming freight handling in the wind, literally in some cases, you can

turn the possible loss into an opportunity to highlight your company’s ability to meet

and overcome adverse situations.

Automated notifications and status updates also provide real-time visibility into

possible issues, allowing your company to pull from safe stock or access additional

resources via other vendors.

4. Reduced Procurement Inconsistencies Enhance Administrative Efficiency.

Administrative controls over inbound logistics reduce the number of inconsistencies

that may occur. For example, if a vendor ship products without the buyer knowing

when they will arrive, how they are being shipped or what level of freight insurance

and protection exists, the amount of paperwork needed by both accounting and

administration grows. With the use of an inbound logistics program, the number of

individual processes can be reduced to a one-touch platform, eliminating risks and

ensuring all vendors stay on the same page. Meanwhile, this also reduces the amount

of paperwork needed in paying vendors and managing shipment-related documents,

including bills of lading.

5. Customer Service and Satisfaction Rates Increase as Overall Product Costs

Decrease.

A key benefit of managing inbound logistics through a dedicated program falls within

the scope of increasing customer service capacity and satisfaction. When customers

receive their products undamaged and as expected, they are more likely to make

repeat purchases in the future. Thus, the amount of overall business increases, which

helps to drive down overall product costs and boost your company’s image.

6. End-to-End Control Promotes Vendor Compliance.

Although vendors are supposed to stay in compliance with the rules laid out by the

inbound logistics vendor guide, some fall through the cracks. Updates may be made to

the document, and the lack of control over vendor actions and shipping selection may

continue to exist. Thus, an effective TMS that includes a vendor module can help

eliminate this risk, returning control over the entire, end-to-end supply chain and

giving buyers the ability to reap cost savings.

Your Inbound Logistics Program: What's Next?

Clearly, the positive effects and relative ease in implementation an effective inbound

logistics strategy and program outweigh the potential drawbacks, many of which are

not as laborious as believed. In fact, the Cerasis Rater now includes a vendor module,

letting vendors work directly with the Cerasis Help Desk, putting the or of inbound

logistics back in your hands. Since using the system requires minimal changes to your

existing workload, you can take advantage of these core benefits and access a new

revenue stream while reducing your inbound costs simultaneously.

Inbound Freight: 8 Objectives to Consider and 4 Areas of Focus For Confident Management

Inbound Freight Management is An Area Each Shipper Can Improve

After each fiscal year, many companies task their operations to figure out new ways to

reduce costs for the upcoming year. Every aspect of the company's factors which

impact the bottom line should and does come under review. However, not every area

of the business is given equal scrutiny. One of those areas that shippers traditionally

do not give the attention deserved is inbound freight management.

Depending on the industry and size of the company, a business can spend more than

40% of its annual freight budget on inbound shipping, according to the Aberdeen

Group, a research firm in Boston. Often more than not, savings in inbound freight

costs can go directly to the bottom line. Most successful companies who have paid

attention to inbound freight view inbound freight management as controlling

inventory in transit. Since inventory is, in many cases, a company's largest asset, the

management of inventory is critical to business success. The proper management of

this function plays a key role in achieving inventory, productivity, and service goals.

Inbound freight involves the management and control of freight from:

• Domestic and offshore vendors,

• Consolidation of vendor shipments,

• Direct shipments to Retail sites and customers at home, multiple shipping points,

and

• Warehouse cross dock opportunities for Retail replenishment and backorder

processing.

The variety of processes supported by the inbound freight process make its

management a complex undertaking.

Effective Inbound Freight Management

Effectively managing the inbound flow of product to your business is a complex

process which is only getting more complex as customer demands increase in terms

of their expectations of service levels. Increasing the difficulty is the shipper's desire

to effect cost reduction while maintaining reliable service. In addition to the more

obvious and visible impact of inbound freight costs to overall profitability, the

management of this area also affects inventory control, overall warehouse

productivity, and customer service.

Making matters even more difficult are issues such as rising fuel charges, the increase

in offshore product sourcing, and the ever changing array of carriers and their service

offerings. Furthermore still is the increasing trend of multi-channel businesses

operating out of multiple warehouse facilities. In addition, direct shipments to Retail

locations and Direct customers make controlling inbound activities in a cost effective

manner much more complex.

As you begin to analyze your inbound freight practices, you should establish

objectives that will help guide your decision making process. Objectives can be

established in the following areas; among others:

1. Reduced freight costs and improved “bottom line”

2. Improvement in on-time deliveries

3. Reduction in purchasing lead times

4. Less handlings and damage

5. Lower inventory levels and reduced carrying costs

6. Providing maximum visibility into the process

7. Improvement in warehouse productivity

8. Increased customer service

In order to meet your objectives, there are a few key areas of attention that can

provide the focus for the analysis. Four key issues or areas that warrant your attention

are:

• Vendor Compliance

• Freight Paid vs. Freight Collect

• Visibility and System Control

• Vendor Relationships

Let's cover each in more detail.

Vendor Compliance

Having a current and complete Vendor

Compliance program is the central area of

focus for effective inbound freight management.

The program should, most importantly, define

vendor expectations and provide for a method

of measuring and reporting on performance

against those expectations. It is one of the

most effective ways to insure consistency and reliability in the management of the

inbound freight process.

Basic measures such as on-time delivery, meeting damage and accuracy expectations,

and providing the proper paperwork are among the key metrics to monitor. With the

increase in imported product and the diversity of domestic vendors and an increasing

use of consolidators, providing a routing guide is a critical piece of any Vendor

Compliance program. By controlling the routing and timing of deliveries from your

vendors, efficiencies throughout the supply chain are possible.

Freight Paid vs. Freight Collect

A growing trend in the industry is the ability to convert from the prepaid freight

concept to a freight collect policy. Those who have performed the due diligence of

the comparison of these two concepts are realizing significant cost reductions and

overall control. They have realized the words “Free Freight” should raise a red flag

and precipitate further discussion.

Although it is sometimes very difficult to gather the required information to make an

informed decision, the effort can be well worth your time. Even if there are no

changes made, the discussions you have with your vendors and carriers often prove

beneficial in other areas.

Visibility and System Control

One of the key elements in an effective inbound freight management program is the

ability to have visibility into the supply chain to track and control inventory

movements, as well as visibility into your freight activity and data. This control has to

be supported by an information system that helps manage this complex process, such

as a robust Transportation Management System.

Many software vendors offer products that help manage the process in a variety of

ways. You should always develop a set of functional and process requirements that

you expect the software to meet before you begin the search. During the search, an

evaluation of their responses to these requirements and a combination of reference

calls, site visits, and system demos should be completed. Making sure you know what

you want is the first step in obtaining a system that meets your needs and

expectations.

Vendor Relationships

One of the most overlooked factors in a successful inbound freight program is the

relationship you have with your vendors and carriers. Those companies who have

taken the time to foster a productive and collaborative relationship consistently reap

the benefits. As in any relationship, having a feeling of trust and the ability to have an

honest and meaningful dialogue are the keys to success.

Many companies try to manage the relationship through rigid contracts and

performance measures. While these are important, having the ability to deal with

someone you trust supersedes any legal restrictions you can place on the process.

Many ideas for improving the process come through this dialogue and collaboration,

rather than through the strict enforcement of an agreement. In addition, with the

speed at which the total supply chain is evolving, having a good relationship is a real

asset in keeping up.

Those companies who have paid attention to the management of the inbound freight

process have seen reductions in overall freight costs, reduced inventories and safety

stock, improved warehouse operating costs, and enhanced overall customer service. It

is worth the time and energy to investigate this often overlooked area in your supply

chain.

Top 5 Roadblocks to Effective Inbound Logistics Management

Modern shippers must oversee thousands of individual processes and activities. With

the added pressure to lower costs to end-users, your customers, it’s no surprise that

the need for increased scrutiny and cost reductions among inbound logistics partners,

your vendors, has gone rogue. Some cite a lack of visibility or lack of control for

reasons to not manage inbound logistics, and while proponents of “increased

visibility” argue more information begets more effective inbound logistics strategy, its

meaning gets lost in the murky waters of the internet.

Instead of trying to gain visibility by tracking every detail involving inbound logistics

on your own, the biggest roadblocks to effective inbound logistics management boil

down to five reasons, and you need to understand what they are and how to stop

them.

1. Lack of Trading Partner Understanding.

The first roadblock is simple. If your vendors do not understand your organization’s

policies and procedures regarding inbound freight, how can they adhere to your

needs? Vendors need access to stringent, high-quality instructions for how to bring

shipments to you. This is where an effective inbound logistics guide becomes

important. As explained in this blog post, the guide details how to proceed with all

possible scenarios for inbound shipments to reduce their associated costs. In

addition, you need a vendor compliance program within the guide to stop vendors

and suppliers from violating your wishes.

2. Stakeholders Fail to See Value in Effective Inbound Logistics Management.

A Peerless Research Group (PRG) report indicated that up to 44 percent of supply

chain entities do not actively have plans in pursuing or using a transportation

management system (TMS), such as the Cerasis Rater. This means that a near-majority

of companies are faced with the pitfalls of internal, low-guidance systems for

managing both inbound and outbound freight. The information only gets grimmer

from here.

Approximately 54 percent of companies actively run metrics on inbound freight, but

these metrics may be lacking. In other words, the term, “metrics,” can be deceiving.

Since a metric is a data point, metrics can include the number of vendors used, the

percentage of on-time deliveries or spend-to-carrier ratios. The nominal information

gleaned by each of these factors results in confounding data that may be highly

affected by metrics not being measured. So, having a strong TMS is essential.

3. Inbound Freight Management Means More Number and Analyses.

In keeping with the metrics’ conversation, a true inbound freight management

program means more data and analyses will be needed. For companies operating

within tight budgets, the usefulness of effective inbound strategy escapes them.

However, modern freight management systems have taken these added costs away

from labor. In other words, automation has replaced the need to hire skilled

technicians and engineers to interpret data.

For example, the Cerasis Rater aggregates metrics and key performance indicators

(KPIs) automatically, giving your company the information it needs to adjust and

move forward on inbound strategy. Furthermore, automation is key to brining

inbound and outbound logistics strategy to maximum efficiency.

4. Departments Fail to Collaborate.

The procurement department manages inbound product, and the supply chain

department manages outbound product. Although ideal for its specific purpose, the

disconnect between departments means that opportunities for cost savings are lost.

Inventory levels may soar or fail to meet customer demand, and profits become

losses. As explained by Amy Roach Partridge of Inbound Logistics,

organizational silos have grown in scope in conjunction with the growth of the global

supply chain.

Buyers and sellers may appear to have different responsibilities, but since they both

perform vital functions for the other, they need to work together. This enables a

better flow of procurement products to the end-user and a flow of orders back to

vendors or manufacturers.

5. “Vendors Save Money When They Have Control.”

The person making the carrier selection has control over shipment costs. This is a

simple fact behind all businesses. If you get to pick it, you are likely to select that

which gives your company the greatest advantage and profit margins. Unfortunately,

you cannot simply force vendors to relinquish control of their shipments, or can you?

Third-party logistics providers (3PLs) have risen in this space to re-distribute the

control of supply chain processes to all parties, providing end-to-end benefits for all

involved parties. Unless a vendor has a proprietary product, you may be able to obtain

the same product at a lower cost, or you could approach the discussion on carrier

selection by focusing on how reduced costs contribute to savings and increased

revenue for the vendor as well. The key is taking your time and not making sudden

decisions without having a backup plan in place.

What You Need to Do Immediately.

Stop making excuses for why your company cannot manage effective inbound

logistics. While the truths behind the reasons for not managing inbound logistics seem

harsh, they are necessary to help your business in new ways and meet rising demand

of consumers. With only 25 percent of organizations utilizing a TMS, opportunities

for growth and greater competitive advantage are everywhere. It’s time to marry the

inbound and outbound departments and start benefiting from a dedicated TMS now.

3 Inbound Shipping Challenges Logistics Executives Face Which Impact the Entire Supply Chain

If you're looking to save costs on shipping, take a look at inbound shipping.

Depending on the industry and size of the company, a business can spend more than

40% of its annual freight budget on inbound shipping, according to the Aberdeen

Group, a research firm in Boston. A more efficient inbound freight program can

minimize delays, save money and even reduce confusion.

75% of companies surveyed by the Aberdeen Group report that inbound freight

management is a key focus point. In one example, a company with over $18M per

year in inbound freight costs reported paying invoices from over 100 carriers –

despite having negotiated preferred terms with five carriers and stipulating their use

on each order.

Logistics and Supply Chain Organizations face three primary challenges when it

comes to gaining the upper hand on inbound shipping spend.

3 Inbound Shipping Challenges Logistics Executives Must Address

Lack of Visibility

Logistics executives are constantly requested by operations, sales, planning,

purchasing, and accounting groups more accurate and timely information on inbound

shipments. Today, identifying what’s in transit, where it is, when it will arrive, and how

much it will cost, requires piecing together information from internal paperwork,

carrier websites, and phone calls – a time consuming, inefficient process. And that’s

for one shipment. A comprehensive report might take hours or days to prepare.

In addition, transportation managers who must rely on predominately manual

processes to track and trace freight, find themselves answering “it gets here when it

gets here”. This lack of predictability has ripple effects throughout the company,

leading to excess inventory, sales obstacles, and variances in the company’s

performance of their supply chain. In most organizations, the lack of reliable, easily

accessible, real-time data means they must reach out to suppliers for shipment details

(carrier name, carrier tracking number or bill of lading, etc). This is an inefficient and

labor intensive process, and ultimately, a costly way of dealing with inbound shipping.

Lack of Control

Most companies have developed carefully optimized plans and routing guides that

specify how users and suppliers should ship material. However, they have little control

over whether these guides are followed, even though they are paying the freight

charges. They must rely on their suppliers and employees to execute on routing

instructions and guidelines, without any means to enforce these optimized plans.

This is less of a problem with outbound shipping spend, since companies typically

have direct control over their outbound freight. But most purchase order terms are

“Ex Works’ (EXW), where the buyer pays the inbound shipping costs and assumes

the risk for the delivery of the goods.

The buyer, in this scenario, is dependent upon the supplier to follow the supplied

routing instructions. Unfortunately, suppliers do not consistently follow routing

instructions, due to their focus on shipping product to hundreds of customers on a

daily basis.

The bottom line is that when a supplier fails to adhere to the shipping request (e.g.,

carrier selection, service level selection, account number identification, special

instructions, notifications, etc.), the buying company bears the additional freight

expenses, as well as the costs resulting from delays in receiving purchased items,

supply chain disruptions, and a lack of visibility into the shipment. Costs that usually

cannot be tracked back to the product level for accurate Cost of Goods (COGS)

calculations.

In addition, once items are en route, the buyer has no means to make changes,

whether reacting to external events such as a weather event, or the need to split a

shipment for separate delivery destinations.

It may be weeks or months before the increased costs are visible because the invoices

for the inbound shipping must be entered and paid before finance can generate a

spend report. Even then, all one knows is the total cost. To break down the data in

more detail requires going through paperwork manually, logging into multiple carrier

shipping portals, and compiling the information various ways to analyze the problem.

So, unless a specific question arises or someone makes a project of analyzing the

inbound shipping spend, the true costs of inbound shipping remains unknown.

Rising Freight Costs

According to the Aberdeen

Research Group, on average,

surveyed businesses experienced

an increase of 14.5% in truckload

rates, an 11.5% increase in LTL

and ship rates, and a 15.1 %

increase in international air rates

over the last two years.

Clearly, external shipping rates are outside the logistics manager’s control. But that

means that careful management of the inbound shipping ecosystem is of greater

importance. In addition to increasing visibility and control as discussed above,

logistics managers are forced to look to other areas of savings:

• Reductions in staff size

• Smaller IT services budget

• Increase centralization of shipping

However, such changes may only exacerbate the problem. So how do shipping

managers control outside costs with fewer internal resources?

Conduct a thourough freight data analysis to see where money has been lost, so you

know where to focus

Implement a robust transportation management system

Work with a logistics service provider who can help develop a custom inbound

shipping and routing program, working one on one with your suppliers

Clearly, managing inbound shipping is challenging. Fortunately, there are now

practical, managed services that enable companies to manage processes, increase

visibility, and gain control of their inbound shipment costs. A complete managed

service solution combines expertise in complex logistics and with an on-demand

system for logistics management. But you need to know what you are looking for

when it comes to automated tools, systems, and integrated services when choosing a

provider or building an inbound freight management program in-house.

Reducing Costs in Shipping with a Focus on Inbound Logistics Strategy

Shippers often forget about the possible savings through an effective inbound

logistics strategy. Unfortunately, this disconnect could be costing tens of thousands

of dollars and eating away at your bottom line. In addition, managing vendors and

inbound logistics can feel like a lot of work for little gain, yet the possible savings by

implementing an inbound logistics program can add up through these key ways.

Reducing Costs in Shipping with a Focus on Inbound Logistics Strategy

Lowest-Rate Carrier Selection Reduces Your Costs.

This is the obvious benefit of having the power to control inbound logistics. You

choose the carrier, and special, negotiated rates you may have with a carrier can be

used. With the exception for time-sensitive shipments, you can drive costs down by

always ensuring the lowest rate carrier is used for inbound shipments. Think about it.

What’s really stopping a vendor from picking a carrier that is best-suited for the

vendor’s needs?

NOTHING.

You need to make sure that your business benefits from carrier selection, not your

suppliers. Moreover, having control over the carrier selection might make things easier

for vendors because they have fewer responsibilities in sending shipments. While

some vendors might disagree with plans to implement and inbound shipping strategy

to reduce your costs, remember that you must look out for your company first.

Metrics and Auditing Prevent Overbilling and Overpayment to Vendors for

Shipping Costs.

Part of the problem with not using an inbound logistics program is the lack of

visibility. Vendors control the processes, and packages may show up unannounced or

outside of preferred times. Furthermore, your company must pay the costs of

shipping, which may more than the carrier’s charges or double-billed. Unfortunately,

without controls in place, you have no way to ensure you are not paying more than

you owe.

Through modern technology, the inbound logistics strategy can be executed easier

than believed, and real-time order tracking and metrics prevent overbilling and

overpayment. Even if a shipment is overbilled or double-billed, auditing can identify

the problem and issue a chargeback to the vendor or carrier.

Metrics can also go further than auditing by giving your company a means to measure

the performance of your vendors, boosting compliance with the rules and stipulations

within your inbound logistics guide.

If your company utilizes a transportation management system, such as the Cerasis

Rater, you can even run comparison reports and gain 360-degree visibility into all

your transportation costs. In addition, dashboards reduce the amount needed to

monitor and review metrics, reports DC Velocity. In fact, this degree of visibility

naturally promotes better inventory management processes, helping you reduce lost

costs from perishable or outdated inventory.

Streamlined Claims Processes Reduce the Amount of Time Correcting Issues.

Freight claims may arise from many issues, including damage during transit, lost

shipments, unforeseen delays and more. With an inbound logistics strategy, your

company could be stuck working with hundreds of carriers and vendors to work

through the process. You may need to file paperwork with each carrier, adhere to

different requirements for processing claims and be subject to varying reimbursement

or payment procedures. In fact, misclassified freight, a responsibility that falls on the

vendors when they control carrier selection and processing, is responsible for more

than 50 percent of all freight claims, reports the Institute for Supply Management

(ISM).

An inbound logistics strategy streamlines claims processes by keeping your company in

control of the filing and processing of claims. Therefore, you can reduce the amount of

work that goes into learning carrier requirements for claims and get payment for approved

claims faster.

Freight Consolidation Enables Better Rates Through Volume Discounts.

Carriers charge less for shipments of greater weight and volume. However, working with

multiple vendors might leave your organization stuck managing thousands of small parcels,

but creating or implementing an effective inbound logistics program enables vendors to

hold packages for pickup until the sum of all packages equates to full-truckload size. In

addition, carriers may offer lower rates as inbound shipments may be on backhaul routes.

Consolidation is not just about individual packages either. An inbound logistics program

consolidates the number of carriers doing business with your company. Thus, you can

increase the volume shipped with a specific carrier, opening the door to lower rates and

better service levels. In an ISM case study, a company was able to successful cut inbound

freight costs by 10 percent while reducing the list of preferred carriers by 39 percent.

What Else?

There will be times when allowing vendors to manage your inbound freight may be

necessary. For example, if you cannot get your inbound products from any other supplier,

you may be forced to deal with their programs. Unless your company is involved in a high-

specialty area of the market, you can probably find the same supplies from another vendor.

Ultimately, you have the power to decide how your company will proceed, and if you do

take back control of managing inbound freight, you can manage the entire process and reap

the rewards.

7 Easy Steps to Create an Inbound Vendor Routing Guide

An inbound vendor routing guide is comparable the beating heart of your operation.

It manages inbound freight, not unlike the incoming blood supply from the lungs, and

pumps it out to the remainder of your supply chain. Unlike the heart, however, your

routing guide needs to be continually updated to reflect the most relevant changes in

carrier preferences, stipulations for compliance violations and detailed instructions on

how to handle different shipping circumstances.

Creating an effective inbound vendor routing guide is not without its share of

challenges. If you do not do it fast enough, it becomes obsolete before printing, and

if launched too quickly, you risk forgetting important details in its scope. Follow these

steps, as outlined by Inbound Logistics, to create a working, evolving guide that puts

the power of control and visibility in your hands.

1. Assess Your Current Inbound Vendor Routing Guide.

If you do not have an existing guide, create a list of the challenges and issues that

your organization has experienced regarding vendors, such as early/ late shipments,

high-cost carrier selection or mislabeling. If you already have a previous version,

review it for issues that were not addressed or were repeatedly missed by your

vendors. Detail is key, so making annotations to your existing guide are essential to

getting the next version ready immediately.

2. Start Where Shipments Begin.

The first part of the guide should focus on the origination of shipments. For

example, provide direction for each vendor that comes from a specific area. This will

help prevent vendors from becoming lost later in the process.

3. Identify the Limitations and Provisions for Each Form of Transportation for

Each Area.

Service capabilities, political or international trade restrictions, duration of transit,

such as overnight, next day, two-day or three-day service, and transit mode should

follow the origination. For each weakness or issue, provide instructions on how to

avoid delays and ensure adherence to appropriate carrier selection and freight

classification.

4. Note Shipment Volume and Weight Issues.

Volume and weight should be classified appropriately into one of four groups,

including the following:

• 1 to 150 pounds or small package.

• 151 to 5,000 pounds.

• 5,001 to 12,000 pounds.

• 12,000+ pounds.

The guide must specify the preferred carriers and paths to shipment for each

classification. This includes accounting for variances in freight classification and cost

due to increasing use of dimensional (DIM) pricing models. In addition, include

provisions to modify shipment sizes to meet the most cost-effective choice. For

example, freight consolidation of small packages and shipments weighing less than

5,000 pounds should be held until enough freight can be sent via less-than-truckload

of full-truckload shipping.

5. Make It Verifiable, and Use Cross-Checking Matrices.

This is among the most difficult aspects of creating an effective guide. It needs to

have a fail-safe to prevent vendors from selecting incorrect shipping methods and

provide a source of cross-checking between shipment selection. A defined set of

rules should serve as the “checkpoint” in this part of the document, ranging from

marking and labeling to back-order processing.

Within the rules, you should clearly specify costs or chargebacks associated with violations

of the guide’s provisions. Such rules provide an incentive for vendors to adhere, and at

your discretion, consider implementing a reward system for vendors that meet reliable

standards for metrics, such as on-time delivery and appropriate fill rates. Include a privacy

clause that holds vendors liable for any unknowing or knowing act of distribution of your

guide to your competitors.

6. Distribute It.

The faster your guide gets to vendors, the faster they can implement changes. However,

printing of paper guides is outdated. While a printed format might be the choice of some

in your organization, remember that technology is only advancing. If you stick with a paper

guide, you will be obsolete within the next few years.

Consider using a web-based portal to provide access to your guide. This allows you to

require vendors to sign in and acknowledge having read the document before using it. In

addition, a web-based guide eliminates all printing and mailing costs associated with it, and

creating non-disclosure agreements via a secure web-browser are relatively easy in today’s

world.

7. Distribute Updates.

Remember “Security Patch Tuesday?” Well, apply the idea to your inbound vendor routing

guide. Make sure vendors know changes to the guide will be updated every (x) weeks, and

include this notification in the initial NDA and distribution of the document. Web-based

guides also have the benefit of enabling automated notification of major changes to the

guide to vendors.

Let the Inbound Vendor Routing Guide Live Within Your TMS!

The final step to creating your routing guide is not really about its creation; it involves

where the guide is located. If you consider the applications of a transportation

management system (TMS) for your company, it is not a stretch to use the same system to

manage all inbound freight. In fact, the TMS can follow all the rules, and then some, of

those identified in your guide per your request, while providing automated data analyses,

and matrices within the system can effectively eliminate incorrect selection.

Of course, it does help to have the document available for viewing by your vendors

within the TMS and in another, secure online location. This way, your document can

be a living, breathing creature, as explained by Deborah Catalano Ruriani of Inbound

Logistics, that helps move your organization forward.

Chapter Two

Technology

Using Logistics Technology to Execute a Winning Inbound Freight Strategy & Have Compliant Vendors

Most shippers have existing vendor compliance programs in place within their vendor

inbound logistics guide. Unfortunately, the traditional logistics of sending out paper

guides and even keeping updated online versions has grown complex and difficult to

control. Meanwhile, the importance of vendor compliance has grown more than ever

as supply chains expand, explains Lisa Terry of Inbound Logistics, and companies

look to trim the fat and optimize workflows to gain a competitive advantage.

Fortunately, today’s logistics technology has the power to execute a winning inbound

freight strategy and maintain compliance in the following ways.

Using Logistics Technology to Execute a Winning Inbound Freight Strategy

& Have Compliant Vendors

1. Different Variables Can Be Automatically Tracked and Accounted for Within

Modern Vendor Modules.

There are literally thousands of possibilities when it comes to selecting the best

carrier, mode, insurance, protection plans, routes and other variables in modern

shipping practices. All this information means that combing through the possibilities

by hand is both cost-intensive and physically tiring, so automation in managing these

situations through algorithms in modern vendor modules is key to maximizing profits

and reducing inbound logistics costs.

2. Increased Use of the Internet of Things (IoT) Optimizes Shipment Status

Visibility and Keeps Costs Down Through Ongoing Assessments.

Key performance indicators (KPIs) within newer vendor modules can help you keep

track of inbound logistics costs and possible issues. The IoT also helps to ensure

KPIs are accurate and reflect the most recent data available.

If an issue appears to occur frequently and falls outside of the specified range, you

can act to resolve the problem. In addition, some inbound logistics management

providers may manage this process for you, letting you keep working to fulfill orders

and make your customers happy.

3. Call-In Routing Centers, Like Cerasis, Can Prevent Vendors From Using the

Incorrect Mode of Transit.

Vendors want to sell more of their products and make a profit, and sometimes, that

profit comes at your expense, especially if you lack control and visibility into their

actions. However, you can eliminate problems with using incorrect vendors by

regaining the power of inbound logistics through call-in routing centers.

For example, Cerasis Inbound Logistics Management within the Cerasis Rater, under

the “FREIGHT” menu option, puts the power of choice in your hands through the

following steps:

1. Vendors call into the Cerasis Freight Desk and provide shipment details to the

representative.

2. The Cerasis representative enters the information into the Cerasis Rater.

3. Notifications are generated and sent to both the vendor and buyer

simultaneously.

4. Upon logging into the Cerasis Rater and entering your PO#, you can review the

shipment details and provide additional instructions for shipping.

5. The instructions are then transmitted back to the vendor, including pickup date

and time, labeling and other appropriate requirements for shipping.

If an existing shipment needs re-routing, the Cerasis Freight Desk can complete the

change at your request, or you have the option of re-routing the shipment from

within the Cerasis Rater. In addition, Cerasis can automatically audit invoices prior to

you sending payment to carriers and resolving any discrepancies or inconsistencies.

Therefore, your costs associated with inbound logistics stay as low and as accurate as

possible.

4. Advanced, Broader Vendor Portals Only Show Pertinent Information to

Vendors, Keeping Proprietary Information Secure.

One of the biggest risks in using paper guides for vendor inbound logistics is security.

Your inbound logistics guide may contain proprietary information that relates to your

inbound freight strategy and gives your company a competitive advantage.

Unfortunately, vendors may not necessarily take the level of care in protecting the

document as needed. In this situation, modern inbound logistics technology, such as

applying the Cerasis Rater to inbound logistics through the vendor module, can

eliminate the possible security breach. Moreover, the legal risk to vendors is reduced,

which may result in lower costs of raw materials and supplies, leading to lower costs

for your company, the buyer.

5. End-to-End Implementation of a Dedicated TMS Reduces Inefficiencies

Through the Power of Dashboards and Real-Time Analytics.

Changing rates and services provided by carriers continue to impact the costs

incurred by buyers. By controlling carrier selection and managing the supply chain

from procurement through last-mile delivery, shippers can find patterns that reduce

overall operating costs that might not have been otherwise noticed. In addition,

analytics can provide a means of verifying the accuracy of information provided by

vendors against the actual status of shipments when picked up. Thus, vendors can be

held liable for compliance violations, which may be used to strengthen the vendor-

buyer relationship or seek out other potential suppliers.

The Big Picture.

Shipper requirements from vendors and increasing demand from consumers leave

little room, if any, for error throughout inbound logistics. By utilizing modern

technologies, including vendor portals, such as Cerasis Inbound Logistics

Management, you can create and execute a strong inbound freight strategy, maximize

vendor compliance and lower your inbound freight costs. It’s a win-win for your

company and your customers.

Inbound Freight Management: 5 Must Have Automation Features in a TMS

Inbound freight management and logistics is receiving a lot of attention as shippers

continue to look for ways to manage and mitigate freight costs. Traditional

Transportation Management Systems (TMS) vendors help with logistics planning, but

do little to address what happens in the day-to-day execution. The problem is

complex and logistics expertise as well as software systems are important to reigning

in the escalating costs and inefficiencies. It's important, if currently utilizing or

looking to hire an outsourced logistics company, that the company offers integrated

services, alongside their technology systems, to help you set up a robust inbound

logistics program.

How big is the problem of inbound freight management?

Inbound freight accounts for between 40-80% of total freight spend and 75% of

companies surveyed by the Aberdeen Group report that inbound freight management

is a key focus point. Total freight spend is between 3.6% and 5.2% of surveyed

companies’ total sales, according to Aberdeen’s results.

To get a handle on costs, businesses say they need increased visibility into shipments

and orders, more control of inbound shipping processes, and increased collaboration

with carriers and suppliers. Existing processes are inconsistent at best – real time

freight tracking and tracing is unavailable, plan optimization and routing rules are

often not followed by suppliers; cost information is difficult to obtain; and current

manual systems don’t scale well with growth. Unfortunately, 90% of shipping

executives surveyed said that their current systems, including their Transportation

Management Systems (TMS), are inadequate for addressing their inbound shipping

needs.

5 Must Have Automation Features in a Transportation Management System for

Effective Inbound Freight Management

1. Real Time Freight Rates: To

combat rising transportation costs

the application must make it easy

for users around the country to

execute policies that deliver

immediate freight savings. Today,

that means the application must

be built with a state-of-the-art

web services architecture, in

order to receive live carrier rates

over the Internet. No more

theoretical savings, but hard ROI

based on live, vendor neutral

access to real-time market rates.

2. Organizational Control: To regain control over inbound freight management,

freight costs, and mitigating risk, a best-in-class application must have a rules engine,

based on optimized plans and routing guides. The system must be flexible to

accommodate custom company business rules, yet powerful enough to force all

users, both internal and external, to follow the policies that ensure efficient and cost

effective shipping. The system’s usability must be such that controls can be designed

and implemented by logistics experts with decades of hands-on experience in

logistics, rather than by computer technicians.

3. Visibility and Data Analysis Reporting: For true shipment-level visibility and

reporting, a carrier neutral, mode-agnostic data repository is critical. On-demand,

managers must be able to identify up-to date trends and patterns, accurately forecast

demand and supply, and make real-time decisions based on actual data, rather than

guesswork.

4. Speed and Scalable. The TMS must be able to support rapid growth demands,

while not feeling bloated with unnecessary features requiring onerous training or

orientation. Busy logistics professionals need practical tools that deliver results

immediately. A system should still work as effectively whether you have 2 inbound

freight shipments per day or 100. Inbound freight management, over time, with a

scalable system, should start to see greater returns as your company grows.

5. Dedicated Technology and Up to Date Web Standards: The technology driving

the automation must be based open standards and an SOA architecture to allow easy

integration with existing systems, including ERP. The inbound freight management

shipping application must allow for rapid deployment. Delays due to IT controls and

backlog reduce savings and put the success of deployment at risk. A dedicated

technology team behind the TMS and logistics service provider will eliminate such

updates and backlogs. Ask the provider if they themselves develop and iterate the

application/system, or if the provider outsources to a software company.

A combination of inbound freight management software and expert integrated managed

services provides an ideal solution to the complexities of inbound freight shipments

where suppliers are a big factor in the cost-reduction effort. Partnering with a proven,

reliable third party logistics company, who also has the ability to deliver both the system

and the services is an ideal way to ensure the entire shipping process is effectively

managed.

Effective Inbound Logistics: A Combination of Automation and Managed Services

Clearly, managing inbound shipping is challenging, as stated in our previous blog "3

Inbound Shipping Challenges Logistics Executives Face Which Impact the Entire

Supply Chain", where we stated a lack of control, visibility, and a constant fight of

rising freight costs. Fortunately, there are now practical, inbound logistics managed

services that enable companies to manage processes, increase visibility, and gain

control of their inbound shipment costs. A complete managed service solution

combines expertise in complex logistics and with an on-demand system, such as a

transportation management system for both outbound and inbound logistics

management.

Effective Inbound Logistics is Truly a Combination of Technology and Expert

Service

Transportation Management Systems (TMS) automation features in inbound logistics

are a key component of a successful managed service for inbound freight because

they allow all the participants in the ecosystem to be managed – suppliers, carriers,

partners, employees, and customers. In Aberdeen’s Transportation Management

Benchmark report, it was noted that while 70% of companies have seen freight costs

increase, a few leading companies have actually reduced their total freight costs over

the last 2 years. They did so by using software systems to increase the visibility into

shipment status, and by increasing the control they have over such decisions as carrier

choice, routing, and price. In addition, well designed integrated managed services

delivered by logistics experts and powered by TMS ensures compliance by suppliers

and employees to the customer’s optimized route guide.

Automation and domain expertise is a powerful combination to achieve savings.

Automation in Inbound Logistics

Automation of the routing guide, shipping processes, and reporting are important to

effective outsourcing of logistics to a managed services provider. One which all

participants of the ecosystem can access with appropriate permissions simplifies and

accelerates logistics execution thus, an on-demand web-based TMS is important to

achieving the cost savings and decrease inefficiencies (and costly errors). The managed

services providers should be using a system that is:

• Carrier neutral – allowing buyer to choose the most costeffective shipping method,

such as Full Truckload, Less-Than-Truckload (LTL), or small package (FedEx or

UPS)

• Encompasses the entire shipping ecosystem – suppliers, carriers, transport modes and

employees.

• Has a Web-services architecture – allows for integration with partners and internal

systems

• Is permission based – Allow real-time, anytime anywhere visibility into all shipments.

• Has a powerful, flexible rules engine – Companies can globally enforce and update

routing instructions, carrier selection and special shipping requirements in a flexible,

user-friendly environment.

Require and Acquire Logistics Expertise

Moving freight around the country, is an exception-driven process with unforeseen

changes taking place regularly. For example, how to avoid a superstorm on the East

Coast, a sudden supply problem in Georgia or a transportation strike in Los Angeles. A

dynamic logistics environment requires domain experts to manage daily activities,

communicate issues with stakeholders and make decisions on-the-fly. When outsourcing,

select a provider whose logistics teams expertise is both deep and broad so they can

handle every imaginable contingency. Compared to hiring in-house staff with such

expertise, outsourcing can be a very cost-effective option.

Inbound Logistics Integrated Freight Managed Services

The role of integrated freight management services, as a compliment to a TMS

technology offering, is to address the problem of supplier compliance, reduce costs, and

to bring logistics expertise to bear on every inbound shipment. Offerings vary in the

degree of automation, the integration of the players in the ecosystem, and in

depth/breadth of expertise. The best freight management service providers use a TMS

software and connect the suppliers directly into the system. The TMS software also gives

them the ability to both implement rules and process – and change them rapidly.

Compliance by suppliers is achieved initially through the customer’s request. Once

suppliers benefit from the reduction in errors, they prefer the managed service and the

improved customer satisfaction. The customer uses the same TMS as the freight

management services team to track and trace inbound shipments, finally gaining complete

visibility, and process control over the entire inbound logistics element of their global

supply chain. When a TMS is not used, the primary benefit to the customer is the

expertise of the managed service provider.

Best Practices To Expect for Inbound Logistics from a Freight Management

Services Provider

In order to effectively manage all

aspects of inbound logistics, a

managed service must be able to:

• Provide the ability to track

and trace shipments for

multiple customer roles

• Process shipment for all

modes of transport

• Demonstrate logistics

expertise in carrier

relationships

• Manage shipment scheduling, processing and execution

• Manage contract negotiation and renewals

• Monitor and enforce business rules

• Seek dynamic, vendor-neutral freight bidding for transportation, as needed

• Provide comprehensive real-time reporting

• Understand and manage reverse logistics

• Provide full freight claims management

• Provide freight accounting services

Conclusion of Effective Inbound Logistics Management

The advantages of such a turnkey system are numerous. The best pricing is secured for

both at will shipping, as well by applying pre-negotiated carrier contracts to regular

inbound shipping. Thorough tracking of all logistics activities provides more informed

shipping history when negotiating new contracts.

Logistics expertise in the freight management services provider ensures business rule

development and enforcement is performed by professionals able to monitor the

processes, execute modifications as exceptions arise, and recommend long-term changes

as the international shipping environment changes.

Invoice consolidation and visibility into the true costs of inbound shipping enable

businesses to implement process changes, if necessary, and reduce costs.

Outsourcing both the technological solution and the logistics expertise, eases the burden

on internal shipping organizations, as well as IT staff. A service empowered by a TMS

solution is fast and inexpensive to deploy, requires no new hardware or software, and

provides access to users company-wide depending on role.

Improving visibility, controlling processes, and better cost management through a

managed service empowered by an effective inbound logistics program, through both

technology and integrated services, reduces costs and improves operations.

CONCLUSION

Gaining More Control of Inbound Freight

Management

Whether your company is an industrial manufacturer receiving inbound shipments of

products to manufacturer your products, a distributor taking shipments of important

inventory, or a retailer looking to restock the shelves, inbound freight is a vital part of

your business, not just your supply chain.

Yet few businesses take control of the management of their inbound freight. Why? It

is complicated, that’s why. It involves multiple departments in your organization that

can sometimes be pitted against one another. It involves multiple companies –

vendors, carriers, trading partners – and various shipping agreements to analyze and

comprehend.

The payoff, however, is still substantial. It is incumbent on the logistics, supply chain,

and transportation managers in organizations to champion the cause to get control of

inbound freight and make sure the C-level executives in the organization understand

the benefits. Hiring an expert partner to help gain control of this complex issue can

pay dividends.

The advantages of such a turnkey inbound freight management system are numerous.

The best pricing is secured for both at will shipping, as well by applying pre-

negotiated carrier contracts to regular inbound shipping. Thorough tracking of all

logistics activities provides more informed shipping history when negotiating new

contracts.

Logistics expertise in an inbound freight management services provider, such as

Cerasis, ensures business rule development and enforcement is performed by

professionals able to monitor the processes, execute modifications as exceptions arise,

and recommend long-term changes as the shipping environment changes.

About Cerasis

Cerasis, a transportation management company founded in 1997, has always believed in the use

of technology to improve process to not only reduce cost but to stay strategic, competitive, and

have the ability to use data from technology to continually improve. In fact, one of our core

values is just that: continuous improvement of our people process and technology.

We built our Cerasis Rater TMS in 1998, launching it as web-based before Google was even a

business. Our (now Army, as our Development Manager, Jerel Byrd calls them) development

team are always continually improving the Cerasis TMS, as we know it is vital to have a system

that is not only innovative, but sound, secure, and enables those in transportation to do their job

all while doing it cost effectively.

Are you using a TMS to help manage your inbound freight program as a shipper? What are you

seeing in the space?

In addition to our transportation management system (TMS), the Cerasis Rater, when you are a

Cerasis shipper, you gain access to the following managed services:

• Transportation Accounting to include: Invoice auditing, one weekly invoice no matter how

many shipments, and freight payment services

• Comprehensive end to end freight claims management: if your freight is damaged or lost,

we will handle the freight claim on your behalf

• Carrier Relations: We will negotiate rates on your behalf and you get better rates thanks to

our buying power

• Inbound Freight Management

• Reverse Logistics

• Robust Analytics and Reports

• Small Package/Parcel Auditing

• Small Package/Parcel Contract Negotiation

• Warehousing

• International

• & More!

Want to learn more? Visit http://cerasis.com

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