Inbound vendor management is such an important aspect of our industry, yet, it is something that is often neglected and companies pay the price for not taking control of this action.
Today, industrial manufacturers are hit hard by economic conditions but the fact of the matter is that manufacturers play in integral role in the economy. Many companies turn to transportation for cost savings and efficiency but only focusing on outbound movement of goods. As a means to reduce operating costs and encourage growth from the improvement of inbound freight movement, many have turned to outsourcing inbound vendor management.
The following are three reasons why manufacturers should outsource:
No Market Leverage: Usually, inbound freight arrives from multiple vendors at different times. Although vendors mask the cost of transportation and even markup their prices, they have less leverage in the transportation market to negotiate lower prices. This is because they are shipping small quantities compared to the the entire manufacturer’s inbound freight.
Misalignment in Responsibilities: Outbound is generally higher in volume and therefore affects customer service directly, making it the main focus for manufacturers. This often leads to designating purchasing professionals with the responsibility of managing inbound freight, which is a mistake as they lack experience and time for proper management and this results in costly inefficiencies oftentimes go unnoticed.
A Vendor Profit Center: It is nearly impossible to assess the true cost of transportation because the costs are hidden within the cost of products and raw materials. Why does this occur? Because manufacturers don’t pay a lot of attention to inbound freight, regularly leaving suppliers to arrange transportation, which leads to freight cost markups and a profit center for vendors.
Industrial manufacturers can surely experience a significant savings in costs when they take control of inbound freight. The decision to outsource to a third party logistics company like Millennium Logistics Management is a strategy of maximum benefit because they possess market leverage and experience in a variation of industries which is of the utmost value. If you have any questions regarding outsourcing inbound vendor management, Millennium Logistics Management is always available to assist you.
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