Cutting costs on inbound freight
While most companies maintain tight control over their outbound shipping costs, they often overlook the savings that can be gained on their inbound freight, which often amounts to 40 percent or more of a company's total freight spend. But applying the same rigorous approach they use in managing their outbound operations to the inbound side can yield big savings, as food and beverage distributor Ben E. Keith can attest.
Two years ago, the Fort Worth, Texas-based company, which supplies restaurants and institutional customers in 12 Southeastern states, decided it was time for a change in its inbound logistics operations. For one thing, it was faced with volatile and unpredictable inbound freight rates. For another, many of the trucks arriving at its docks weren't filled to capacity. On top of that, routes were not optimized, and it was difficult to know what was coming so the company could respond quickly to customer demands.
The problem lay not so much with its suppliers, but with the transportation management system (TMS) the company was using to manage its inbound freight. This resulted in delayed shipments and congestion at the docks of its eight food logistics centers.
"We had experienced a fair amount of growth. As a result, our network was getting so large that we were not able to react quickly enough to consolidate our loads," explained Owen Stull, director of logistics. "We were flying by the seat of our pants, and it was not very efficient. We could not sift through the data fast enough with our old TMS. By the time we got through it, the information was out of date."
That's when Ben E. Keith's logistics team turned to ArrowStream, a supplier of transportation management software. Early on in the process, the company provided ArrowStream with about six months' worth of data to analyze in an effort to identify opportunities for savings and efficiency improvements. By all accounts, the exercise was a success. "It turned out that there was a lot of potential from what we were doing before, so we moved forward with ArrowStream," said Stull.
The flow of goods at Ben E. Keith's docks became much more predictable after the food and beverage distributor adopted a transportation management system.
Managing inbound freight at Ben E. Keith is now the job of ArrowStream's Crossbow solution, a performance management platform for inbound logistics that is delivered on a software-as-a-service basis. Among other successes, the software has helped the distributor uncover vendor combinations that resulted in greater freight consolidation and allowed it to push more orders into repeated cycles matching those plans. Since it began using the Crossbow system, Ben E. Keith has realized savings of 8 percent on its inbound freight costs.
Loads are now preplanned, and improved communication among Ben E. Keith's logistics and purchasing teams has resulted in better routing. "Our carriers have more consistency in the loads they carry now, and our suppliers don't have to adjust their orders, which makes it better for us," said Stull.
Dashboards provide at-a-glance information on the status of loads, and a monitoring feature suggests adjustments to optimize inbound freight. "We did not have that visibility before," Stull added.
A version of this article appears in our December 2016 print edition under the title "Sound inbound."