Transportation is more than simply delivering items from point A to point B. It is a complex industry that requires technology, careful management and strategic thinking to successfully meet customers’ increasing demands. Now more than ever, shippers are expected to deliver items faster, at lower costs and with greater visibility throughout the process. This pressure has brought innovation and optimization into the spotlight.
However, new solutions and technologies are often a large investment and can be difficult to justify for a shipper, requiring organizations to leverage a 3PL’senterprise agreements and expertise to deploy a high-performing network with accelerated speed to value. To remain equal with their peers, it is critical for organizations to make decisions based on current market intelligence and focus on efficiencies. Below are three key areas for effective transportation management:
#1 Benchmarking With the industry experiencing an extremely volatile freight market due to volume fluctuations, increased regulations and continued driver shortages, shippers need benchmarking to know that they are buying capacity at the market rate. This is essential to provide insights on how their rates compare as the market swings. To successfully manage transportation costs companies must:
• Be Proactive: Rather than being in a reactive “firefighting” mode to address daily customer pain points, adopt a more strategic approach by evaluating areas for improvement either from a cost position or supply chain performance perspective. It is also helpful to institute a formal continuous improvement plan through an active project list and to leverage business intelligence tools to quantify internal policies like customer allowances, back orders strategies and minimum order quantities. Be sure to itemize the supply chain costs that are the by-products of your environment by looking at elements like end of month surges and order change policies that drive costs, quantifying them to provide visibility into the costs of policies and evaluating the opportunity for changes.
• Respond to the Market: Utilize real-time market intelligence to drive your capacity strategy and make recommendations for action when appropriate. For example, in response to customers’ demands for increased shipping visibility and reduced costs, organizations are using technology and integrating real-time visibility tools into their execution platform along with powerful business intelligence applications to enable network engineering.
#2 Route Optimization With customers looking for efficient delivery and visibility throughout the supply chain, shippers are being pushed to reduce transit times and cut costs. In order to do this, systems need to be in place to optimize orders and drive shipment consolidation or mode shift, which requires providers to frequently re-adjust transportation routes and schedules.
#3 Strategic Investments Thinking deliberately about the best ways to manage your transportation budget ultimately leads to efficiencies. By focusing on the right initiatives, you can elevate your performance while also reducing supply chain costs. Areas to consider include:
• Tracking Technology: Tracking tools allow more immediate adjustments to be made throughout the supply chain. Offering a simple notification of actual arrival times versus estimated can significantly improve the customer’s experience. Tracking technology can also help shippers better manage and maintain their assets by providing visibility into inventory status and replenishment needs.
• Data Management: Technology innovation has created more and more supply chain data, which can improve network performance. From the moment demand for transportation is established until the time the invoice is settled, data is created within transportation management systems. This can be utilized to provide insights on the optimal capacity provider and mode and best delivery routes.
To adapt in a fast-paced environment, shippers must look at areas like benchmarking, route optimization and strategic investments or partnerships to keep up with their peers in the industry. By evaluating these three areas, organizations can optimize operations and innovate transportation processes. Understanding the market and investing in strategic partnerships can help organizations balance consumer expectations with logistics costs.