Managing Inbound: The Time Is Right
Most readers of this magazine know the value of managing the inbound flow.
"But most companies would readily admit they have less control over inbound shipments than outbound shipments," notes Dan Cushman, chief marketing officer, Werner Enterprises.
That is changing, according to readers interviewed for this annual trucking issue. By managing inbound, companies aim to speed and reduce inventory, better align demand signals to supply, reduce touches and related costs, and combine inbound and outbound shipments with fewer carriers to gain better pricing and service.
The capacity crunch of the past few years has added a new dimension to managing inbound - finding space.
"When capacity was very tight, our customers said, 'Vendors use multiple carriers to ship freight to us, and we don't capture it. If we got involved in inbound routing, we could capture that capacity demand and optimize it across all our vendors. We could eliminate deadhead miles or half-filled trailers, and everyone wins,'" says Werner's Jim Schelble.
Managing the inbound flow gives you more touch points to work with your carrier to help rationalize equipment and driver use—not only to find capacity, but to share in the financial rewards that optimization creates.
Besides helping carriers optimize, you can also boost their operating ratio by taking away freight in lanes that are not profitable, and matching that freight with carriers who are looking for that business.
Having the "big picture" of your inbound/outbound flow creates more opportunities for "freight engineering" with your carrier.
Now that the capacity crunch has eased in some areas, many have the inclination to revert back to buying on price because of the so-called "soft market."
"When capacity was tight, it was all about partnerships. Now it's all about price," says the president of one mid-sized carrier I recently spoke with. "What happened to all those partnerships?"
While it is true that having an abundance of capacity keeps rates lower, and that gives some more inertia to doing business on price only, having plenty of capacity gives you an opportunity to do something else, too - finally commit to fully gaining control of your inbound flow.
Here's why. When capacity was tight your management bandwidth was most likely tied up with getting capacity that you really needed.
Some of that management mind share can now be focused on the complex task of unbundling all the transportation costs from your inbound shipments.
Here's another reason. When capacity is tight you have fewer choices, or at least a more difficult task in finding space, making a new inbound initiative more complex.
Having beaucoup capacity gives you greater flexibility to really rock. The time is right to manage inbound.