Advantage Inbound Logistics

It cannot be a pure coincidence that our industrial companies all at once have started to focus on the inbound flow in their efforts to gain logistics control. Inbound, meaning logistics and transports from suppliers to central warehouse or factory, in comparison with outbound logistics which comprises the flow from factory/central warehouse to end customer.

The latter is usually a prioritized starting point when there is a need to take control in the logistical flow and also much easier to get your hands round. But now the time has come to create efficiency also in the inbound flow. Inbound is per se more difficult since it’s about managing several suppliers to one central ”point” – meaning a many-to-one relationship.

A challenge with potential

Generally speaking product companies are lacking control on deliveries and have difficulties in predicting delivery lead times and costs, which depend on the difficulties in managing their suppliers. This implies companies increasing their logistics spend – an increase impossible to control. What processes and tools are needed to achieve improved transparency and control?

Not only costs go up, often the companies purchase their goods with freight included, which means the shipper has difficulties in figuring out the cost of material in comparison with the cost of transport. Can we lower the freight spend if we call off our own tariffs instead of the suppliers? If the company has enough transport volume the answer is “yes” to that question.

Then the next problem occurs; how can I manage my suppliers to call off transport services on my agreements? This requires an ownership of the process, which these companies usually don’t have. Furthermore, there is a high potential in consolidating the pick ups from several suppliers, both from an environmental and cost efficient perspective.

To summarize there are many reasons why you would like to take control of your inbound process:

•  Increase visibility and control
•  Better production planning and control
•  Make the logistics cost visible and not part of the material cost
•  Consolidate pick ups 

All in all this implies increased control and visibility and lower logistics spend.

How to solve the problem?

By increasing the transparency and share the information with your suppliers. It’s all about having good IT tools that support a standardized process. By defining a shared working process you also increase collaboration with the suppliers and create economies of scale with higher volumes. The advantages results in positive environmental effects such as increased capacity utilization, lower cost and traceability in the whole flow.

Lena Ridström
CEO
lena.ridstrom@primelog.com