In their efforts to run an efficient supply chain operation, many brands employ various tactics to incentivize or penalize suppliers to drive necessary behaviors. On-Time, In-Full (OTIF) penalties are one common example. However, incentives and procedures don’t always cause the expected outcomes.
Some suppliers may have other skill sets, such as product development, but don’t excel at product fulfillment. This situation can result in an ongoing cycle of penalties and the potential delisting of good products.
A successful outbound fulfillment operation begins with a disciplined, effective inbound management program. However, despite best efforts, many supplier management programs fail to deliver consistent results.
That’s why many retailers and distributors partner with a third-party logistics (3PL) provider to develop an inbound fulfillment program designed to meet their requirements and support their suppliers.
How a 3PL Facilitates Inbound Logistics Management
Aligning with partners to support their business while meeting your standards can deliver positive outcomes such as better terms, reduced lead times, cost savings and consistent supply levels during market fluctuations.
Prioritizing these relationships helps your suppliers understand your business better. A transparent, mutually agreed-upon supplier compliance plan clarifies your requirements and penalties for exceptions, such as late delivery or not following route guidelines. A 3PL-managed inbound program can reduce freight and warehouse costs, improve information speed and accuracy, and ultimately maintain and grow customer satisfaction.
Here are some tips and benefits to consider when working with your 3PL to develop an inbound program:
Establish Vendor Inbound Compliance Standards
Set Vendor Inbound Compliance Standards (VICS) for the price and services you expect from your suppliers. The OTIF metric mentioned earlier is an increasingly common VICS metric with large retailers. OTIF penalizes early arrivals and late loads, which allows loading docks to schedule labor and stage orders based on strictly scheduled arrival and departure times.
A 3PL can help devise and manage VICS to balance between performance and supplier relationships. Ongoing analysis can help identify opportunities for improvement, such as fine-tuning routing or carriers to benefit all parties involved.
Standardize Program and Pricing
By working with a designated 3PL to support your suppliers, you can negotiate a standard program and pricing that is scalable and quickly deployed across your vendor base. Vendors will appreciate consistent, reliable resources to serve your organization.
Expedited Supplier Setup
Your 3PL will be set up with essential data and integration points, enabling efficient deployment across participating supplier partners and expediting new supplier setup. Your organization will be able to scale and manage the vendor base more efficiently with a single point of interaction.
Consolidate Inbound Management
Your 3PL can help simplify the complex coordination across many disparate suppliers and serve as a streamlined point of contact. The 3PL can manage your VICS program and coach suppliers on ways to improve compliance for a more efficient inbound process. Also, with a 3PL in the mix, you can take advantage of lower rates and better service with consolidated deliveries, such as building a full truckload compared to multiple LTL shipments.
Transform Inbound Logistics into a Competitive Advantage
Retailers and distributors can transform inbound logistics from a costly expense to a competitive advantage by engaging a reliable, experienced 3PL partner. Whether optimizing freight management or streamlining inbound logistics for manufacturers, a strategic relationship with a trusted 3PL can significantly impact efficiency, costs and your end-customer’s experience.