Ins and Outs of
Inbound and Outbound Logistics
How service centers can optimize material handling, control costs and automate the receiving and delivery functions.
Freight has become a larger and larger component of overall material cost. From fuel surcharges to duties and related fees, service centers have a renewed focus on controlling costs in both inbound and outbound logistics. While many companies rely on spreadsheets and manual processes to manage logistics, others are looking to automate and improve the overall management of the processes associated with material handling and delivery.
Capturing costs that typically come in after the material has been received has always been problematic. How do you apply the costs to the material? What if the material has already been shipped? What if only some of the material has been shipped? How do you capture multiple types of costs from multiple vendors?
These are some of the questions that companies wrestle with when evaluating the first business process in their supply chain. Luckily, there are systems available that support the capturing of multiple cost elements at the purchase-order, line-item level. Items like freight, fuel surcharges and handling fees can often be captured, posted to the correct material and then processed correctly through normal accounts payable vouchering processes. Companies that import metal from overseas often require the tracking and management of the true “landed cost” of the material, which would include broker, duty, surcharge, storage and other fees.
Eliminating the redundancy of data is another key goal in improving inbound material functions. Purchase order confirmations, advance ship notices, blanket order releases and other purchasing transactions can be transmitted via EDI and e-mail. In many cases, the electronic delivery of the transaction can update the business system with delivery date, carrier and other pertinent purchasing data.
When companies analyze their inbound logistics functions, whether domestic or imported, they look for an integrated business system to manage and automate the costs associated with inbound material receipt.
On the sales side, managing outbound freight, selecting carriers, scheduling deliveries, loading trucks and generating bills of lading are also functions that are often managed via manual procedures. While most service centers utilize a business system and perform the process of shipping within that system, research tells us that ancillary functions relating to material distribution are not managed as efficiently and cost-effectively as these companies may desire.
An enterprise-class, multi-carrier shipping solution, as part of an overall enterprise business system, certainly fills the void. This enables a high level of efficiency and productivity by way of automating heavy freight LTL shipping. Key items that are often addressed through such solutions are:
n A central repository of all carriers, including zone coverage and “zip to zip” rate tables
n Rate shopping profiles that enable carrier selection during quoting and order entry
n Generation of BOL documents for LTL carriers
n Automated scanning and packing of material, including truck loading and sequencing
n Electronic communication with both customer and carrier, including ASN’s and schedules
Through these capabilities, a company can deliver optimal customer service both during quote entry and at time of shipping. Benefits include reduced errors during the fulfillment process, cost savings, reduced material handling time and higher profit margins per delivery.
Research indicates that many service centers are managing the receiving and fulfillment functions in some fashion through an integrated business system, but clearly there are areas for improvement. These same companies have taken the initiative to broaden the scope of what logistics means to them. They have scrutinized their cost structures, analyzed their communication stream with third-party logistics providers and have reduced data redundancy at both the beginning (purchasing) and end (shipping) of their supply chain through the careful implementation of a contemporary service center Enterprise Resource Planning system.
Verticent Inc., Tampa, Fla., offers a Windows-based ERP software suite to the metals service center industry. For more information, visit www.verticent.com.