5 Steps to Take Total Control of Your Inbound Logistics Costs (Part 5)

Posted by George Muha on Sep 19, 2016 3:47:50 PM


Congrats!  You've made it to the final step of reckoning!  If you've followed my instructions over the past four parts, I guarantee you've put money back into your company's cash register (where it belongs)!

Now that you're becoming a pro at affecting the top 20% of your vendors, you have the tools to go after the remaining 80%.  After you do that, you are going to use the principles outlined below to skyrocket your business to unforeseen hights!  Now, let's land this ship.

Collaborate With Vendors

To achieve the pinnacle of supply chain excellence withing inbound. there are several things you must have.  Some of these include analytics, key performance indicators, technology, Lean training and several other items.  But you don't need the Millennium Falcon to make some real and lasting changes.  The one thing you really need to master is the art of collaboration.  




the action of working with someone to produce or create something.

Collaboration is a word that gets thrown around a lot in business.  But the problem is it's rarely ever used to it's full potential.  The reason is not beacuse people do not know how to collaborate.  It's because they over complicate it.

So in this session, I am going to give you the secret that will change your view about collaboration and get your vendors eating from your hands.  

First, I'd like to tell you the most common mistake about collaboration.  Everybody wants to really work in conjuntion with their suppliers and customers.  So the biggest faux pas they do is get the biggest available leader intheir company to talk to the biggest available leader at the company they want to collaborate with.  They have a big three hour meeting to discuss how they will "collaborate" with each other, then they come up with a game plan that won't work in a million years.  After that they go out and spend too much money on food and drinks.  Sount familiar?

But for collaboration to take hold, it's the folks in the trenches that need to be taking the lead.  In fact, the keystone to supply chain collaboration is to keep anyone with a tie (or even a collared shirt) completely out of the conversation.  Trust me,these people are useless when it comes to collaboration.  Okay, I know I am generalizing and that's not nice.  The point is that what you must do is get the people in the plant that are doing the day-to-day work to speak to the people in the plant that are doing the day-to-day work of the collaborating company.


When this happens, something magical occurs.  It's the same kind of thing that occurs when you bring an interpreter to a conversation where everyone is speaking a foreign language.  Typically, this unwinds in this three step process

  1. The plant guys/gals correct all of the redundant things leadership or sales people set up.
    • I have witnessed the following conversation multiple times.  A plant manager of the shipping company says, "I wish we could ship once a week, but your purchasing department says they need the inventory dispersed throughoutthe week."  The operations person from the customer says, "I wish you would ship once a week.  Your product just sits all week so I don't know what they are talking about."  Boom!  Within the next 30 seconds a solution is born.  Instead of shipping four small orders a week, one weekly shipment was arranged.  Plus the freight cost on the consolidated order is much less than when you ship multiple smaller orders.  Plus the receiving company does not need to tie up floor space with unneeded inventory.
  2. The plant guys/gals look for additional areas that make their lives easier.
    • Operational people know how operational people think.  So once they untangle all the things that were previously set up, they can start looking at ways to help each other.  The way operational people think is if they can find ways to cut out waste, they'll do it.  My favorite example of this is when a warehouse manager friend of mind realized one of her vendors was shipping truckloads of product every week.  She would then spend hours unpackaging their product and repacking it with her own company's branded boxes.  After a while she realized it would make everyone's job easier if she asked the vendor to simply ship the product without packaging it.  It was a full truckload so shipment was sealed and there was no threat of theft.  The end result is the vendor saved a ton of money in packaging materials and my friend cut out hours of unpacking the product and paying to have the corrugated thrown out.  She also put herself in a position to ask for lower prices (which is where the gold is).  
  3. A new, unbreakable bond is formed.
    • Once operational people start speaking the same language, its like they are working for the same company.  They get to know each other's operation as their own and can start to rely on each other in a way a sales person or C-level's can't manufacture with theories and promises (or expensive bar tabs).

This three step process is not the rule or a road map.  It just outlines some of the real benefits that can unfold when collaborating the right way.   The point is, if you allow the people in the trenches to do the collaboration, healthy outcomes are always the results.

In summation, the pinnacle of managing inbound transportation is collaboration.  The secret to collaboration is to allow operations folks to intermingle.   This really doesn't get more complicated than that.

Once collaboration is in full swing, then you can start talking price points.  If the collaboration resulted in a cost savings for the vendor, then there is ammunition to start the negotation process.


Go down to your plant floor and find out who in your company knows the ins and outs of the day-to-day operation.  Tap that person on the shoulder and tell them you are taking a road trip to your biggest vendor.  

Topics: freight savings, logistics savings, inbound freight checklist

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