Inbound logistics includes everything you need to create your products and services, from sourcing and procurement through to reverse logistics. It covers all the activities that bring products or materials into your business. There are costs in each stage of the inbound process and finding savings and efficiencies depends on how well your supplier relationships are working. When inbound transport, warehousing and inventory management are outsourced to third parties this creates its own management challenges.
What is supplier collaboration?
Why do we need to develop collaborative relationships with our key supply partners? Because we want to a) reduce costs, b) make process improvements and c) encourage innovation in products or services. The first two both seem quite straightforward but to achieve but c), we need to be open and transparent and focus on building trust.
How to build strategic partnerships
This starts with finding dependable suppliers and partners that can offer the most competitive pricing and consistent quality. Prioritising and leveraging these key relationships create a “win-win” situation. This approach generates business value for both the buyer and supplier.
The challenges
There may be some reluctance by your chosen suppliers and service providers to share transactional data or details about their processes. Some organisations have a problem with working openly, thinking that sharing operational and financial information leaves them in a weaker negotiating position. Old adversarial relationships with strategic suppliers need special attention. They drain resources and waste management time.
Optimising inbound logistics through supplier collaboration
Open and transparent communication means the sharing of real-time online data. Your suppliers need to share information about their own sources of supply – partners and subcontractors (your Tier 2 suppliers), locations, product traceability as well as transactional history.
The major cost drivers for inbound logistics are purchasing, supplier management, transportation, receiving, warehousing, material handling, and inventory management. If you are working with a third-party logistics (3PL) or 4PL provider, use their expertise to create ways to improve your processes.
Technology tools and solutions
Cloud-based software solutions such as Transport Management Systems (TMS) have made data-sharing safe and secure with easy to use, via dashboards and alerts. Outputs include performance metrics that can be compared to your preset key performance indicators (KPIs). Some newer products apply the latest tools including AI, Machine Learning, and Blockchain to support supplier collaboration. Data analytics can provide insights into your suppliers’ cost structures.
Risk mitigation
Supply risks are real and constantly changing due to political instability, weather effects such as flooding and temperature as well as staffing issues such as strikes. Supply chain management should have risk assessment tools available to identify possible disruptions and take steps to mitigate them.
An agreement with your key supplier about compliance explains your requirements and penalties for errors such as late delivery or not following agreed routes. Such an understanding can reduce transport and warehouse costs, improve speed and accuracy, and increase customer satisfaction.
Keys to success in supplier collaboration
1. Sharing information
2. Track key performance metrics.
3. Embrace technology.
4. Tackle the challenges – be proactive.
5. Define areas of responsibility
Effective partnerships based on shared information reduce costs, improve service delivery, and stimulate mutual growth. An accepted best practice is to develop solid relationships at key operational touchpoints as well as at various management levels.
SCCG can offer unprecedented expertise in optimising all aspects of your supply chain, from purchasing to reverse logistics. Our dedicated team is here to support you in any projects you might have. Contact us at +44(0)1926 430 883 or info@sccgltd.com
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