Freight Consolidator: What It Does and When to Use One
Running out of inventory is a recipe for disaster in just about any industry. This is what is commonly referred to as a stockout. Effective transportation management plays a critical role in preventing these situations.
When stockout situations happen, it is bad news for your company. Not only can this result in lost sales, but it can also drastically tarnish your company's reputation as being reliable.
Sure, big-box retailers can stick to the idea and assurance that their customers will just buy a similar item. However, for smaller retail operations and vendors, this is not a luxury you can afford. Apply this same problem to your manufacturing operation and you can really see how devastating it can be to deal with a stockout.
Inventory management is, by far, one of the most difficult tasks in most businesses.
In fact, companies spend millions of dollars on hiring inventory control specialists and updating tech solutions in an effort to stop this from happening. But what role do carriers play in all of it?
Honestly, quite a lot as it turns out!
Poor carrier performance is a major contributor to inventory issues. Luckily, it is also the one factor that you can control as a retailer, manufacturer, or distributor—with very little financial cost involved.
In this blog post, we will be talking about the roles that carriers have in stockouts. Furthermore, we will give you a few strategies to employ to help prevent the dreaded stockout.
Automation Helps Improve Efficiency and Avoid Stockout Situations
Once your company has established inventory control levels that are acceptable, the next step for avoiding a stockout is to upgrade your technology.
One of the major pushes for tech in your logistics operations in 2019 has been automation. Everything from cobots to robotic unloaders is driving warehouse automation in distribution centers around the country. This tech trend doesn't seem to be going anywhere and many have embraced it as the future of logistics.
With all this fanfare, if your logistics company is not using these innovations, you risk falling behind over the next year or two.
However, there is a good reason for its adoption in this industry. Aside from the fact that automation makes most things a lot simpler, when applied to inventory controls, it can greatly reduce the potential of a stockout.
Work with Dependable Carriers
Many of your stockout situations can be attributed directly to delayed shipments.
Missed deliveries, whether due to restricted shipping hours or freight delays at the terminal with LTL shipments, can all impact your inventory levels.
Working with a carrier with proven results and delivery standards is a vital step toward improvingyour inventory controls. While it is attractive for many companies to focus on carrier pricing, and for good reason to an extent, microscopic cost-saving efforts can end up negatively impacting your company in the form of a stockout.
When that happens, it doesn't really matter how much money you saved. You might be losing even more than that!
Implement a Carrier Management System
Probably one of the best things that you can do to avoid a stockout is to employ a robust CMS platform.
This type of software solution is generally fairly easy to implement:
- Install the platform
- Train your employees on its proper use and maintenance
- Put it into action alongside any other software solutions you utilize
As a bonus, most CMS platforms are able to sync up to other software suites to further expand their capabilities.
Modern carrier management systems are designed right out the gate with robust technology. Tools you will commonly find aboard these dashboards include:
- The ability to log and review deliveries
- Document delays
- Measure various other carrier KPIs
Just log on and search carriers based on factors such as:
- Locality
- Availability
- Cost
The platform does all the rest and matches you with carriers that best fit your criteria.
Furthermore, you can save these carrier profiles for future shipments and even rate them across the network.
Carriers create stockout situations in a variety of ways. Anytime they perform poorly, run into multiple delivery delays, or are slow to respond to customer inquiries, your stockout potential increases. Using the best carriers when possible and keeping track of their quality over time significantly reduces your risk.
Final Thoughts
One of the best ways to acquire and implement a customized CMS is with the help of a well-rounded 3PL.
Redwood's Modern 4PL approach is at the forefront of logistics tech implementation. Through our experience and large partner network, we are able to help our clients stay on top of inventory control, as demonstrated in our case studies.
Whether you are a:
- Distributor
- Retailer
- Manufacturer
We can help you implement your new CMS.
Do not hesitate to reach out to us today if you are at risk of experiencing a stockout or have other potential risks at bay!
FAQs
What is a stockout, and why does it matter for businesses?
A stockout happens when you run out of inventory and cannot fulfill customer orders. It matters because it can cause lost sales, disrupt operations, and damage your company’s reputation for reliability. For retailers, manufacturers, and distributors, even a short inventory gap can create bigger business problems than the cost of preventing it.
How do carriers contribute to stockout risks?
Carriers contribute to stockout risks when they miss deliveries, delay shipments, or respond slowly to service issues. Restricted shipping hours and freight delays at terminals can also push inventory below safe levels. In practice, poor carrier performance can directly interrupt replenishment and create avoidable inventory shortages.
How can a carrier management system help prevent stockouts?
A carrier management system helps prevent stockouts by giving you visibility into deliveries, delays, and carrier performance. It lets you log shipments, document problems, measure carrier KPIs, and compare carriers by locality, availability, and cost. That makes it easier to choose dependable options and spot recurring service issues before they affect inventory.
What features should you look for in a carrier management system?
A useful carrier management system should let you review deliveries, document delays, and measure carrier KPIs. It should also support carrier search by criteria such as locality, availability, and cost, and ideally sync with other software you already use. Those features help turn carrier data into practical decisions that reduce inventory risk.
How does automation help reduce stockout risk?
Automation helps reduce stockout risk by improving inventory control accuracy, speeding up processes, and reducing human error. When automation is applied to warehouse and inventory workflows, it can make replenishment more reliable and help you maintain safer inventory levels. It is especially useful once basic inventory control thresholds are already in place.
Why should businesses choose dependable carriers over the lowest price?
Businesses should prioritize dependable carriers because small cost savings can be outweighed by the expense of a stockout. If a cheaper carrier misses deliveries or creates delays, the resulting inventory shortage can cost more than the shipping savings. Reliable performance is often the better long-term value when inventory availability matters.
What is the best way to reduce stockout risk for a retailer, manufacturer, or distributor?
The best way to reduce stockout risk is to combine stronger inventory control, automation, dependable carriers, and a carrier management system. That mix improves visibility, helps you track delays, and makes it easier to select carriers with proven service levels. For many businesses, better transportation management is a key part of avoiding inventory shortages.
