The Essential Guide to

Inbound Freight
Management

A PUBLICATION OF CERASIS
 TABLE OF CONTENTS

Introduction

1 Best Practices

2 Technology

Conclusion
INTRODUCTION
 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.
 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

Get a Demo of our TMS or Inquire
About Our Services

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