For those of us whose livelihood focuses on supply chain management, it’s clear that disruption is now a normal part of business. Recent examples of front-page news include extreme weather events, the pandemic and international unrest. When managing a supply chain, there are lessons to be learned from each of these events.
Through conversations with senior executives across many industries, it’s become clear to me that in this often-disrupted environment, controlling the inbound supply chain is being viewed as a necessity in boardrooms. The common thread in these discussions is that the suppliers are struggling not only with supply, but with transportation. Goods are sitting on docks waiting to be shipped, and accountability is lacking. All of this is creating a lot of frustration.
Inbound Supply Chain Visibility
To understand what’s driving this, let’s consider the nature of supply chains. Any complex supply chain tends to rely on a broad supply base. While a robust procurement strategy normally includes suppliers that are large corporations, it also often includes small and mid-sized businesses.
Shippers don’t have much visibility of these inbound shipments from supplier to plants and distribution centers. The suppliers have the best of intentions, but from a transportation point of view, they either lack scale or resources, which means they just aren’t getting it done. The results are profound, from empty shelves in retail stores to manufactured goods in varying states of completion, just waiting on a few parts.
Collaboration Is Key
Taking control over inbound supply chains effectively turns out to be a team sport. Supply chain management is an orchestration across many functions, including procurement, finance and operations as well as integration with trading partners, such as suppliers and carriers.
Let’s look at everyone who should have a seat at this table:
- Procurement must support the unbundling of freight costs from the cost of goods with suppliers
- Transportation teams must be able to rate these transportation moves to ensure the underlying transportation is valued at market rates
- Finance teams must navigate the proper accounting and establish processes to support what become “new” transactions to be managed
- Technology must have the tools to create freight status visibility across a supply base with varying levels of scale and technical sophistication
Eventually the stage is set to manage these moves and control the inbound supply chain. So, what next? What does the execution phase look like?
Networks must be organized and even possibly re-imagined to the extent that the inbound freight is complementary to outbound transportation activity. This takes engineering support if the goal is to be best-in-class. Next, assets or a carrier base must be assembled to support the activity, as well as accounting and processes to support the transactions. And finally, when the bell rings and the transportation moves are ready to be managed, the control and responsibility for delivery has shifted, so every load must be accounted for at the end of the day.
Success in controlling your inbound supply chain results in better visibility, reliability and savings. With improved visibility you can better manage inventory, allowing you to rely less on buffers or safety stock. And it can provide reliability as well as efficiency when inbound transportation is carefully married, or synced, to other outbound transportation routes. Done properly, both can ultimately result in cost savings.
Achieving success takes process management discipline and provides visibility stakeholders can rely on every day. Just like there are many lessons learned from navigating all the supply chain disruptions shippers and 3PLs routinely face, there are plenty of lessons Penske Logistics has learned, pioneering inbound strategies for over 30 years.
If you’re ready to take control of your inbound destiny, Penske Logistics can help.