Transportation management is no longer a tactical approach to simply moving freight and doing it at the lowest possible cost. There are several factors that exist today that are forcing shippers to use even more resources, which distract from their core competencies, in order to have a strategic and much more nuanced, complex transportation management practice. Those savvy shippers who either find those resources internally or are doing what a lot of shippers are now doing, outsourcing to a transportation management service provider, are using a more strategic and effective transportation management approach as a competitive advantage tool, in the ever-challenging economic and commercial landscape.
As we head towards what many experts are citing as a 2017 carrier capacity crisis and growing demands from consumers to keep them happy call for shorter delivery cycles, the traditional strategy of procurement cost saving and shipment consolidation opportunities have to be supplemented through innovative solutions, to deliver the best bang for the buck.
This is especially relevant for third-party logistics and transportation management service providers, whose service fee is based on reducing cost and streamlining the shipper’s supply chain. For those looking to get more effective transportation management, here are 10 ways effective transportation management drives competitive advantage.
Effective transportation management strategy takes into account the availability of materials and order fulfillment requirements, ensuring that those resources are optimally utilized and warehouse capacity. Attempting to “normalize” flow through a distribution center or inbound to manufacturing is a critical aspect to controlling overall logistics and transportation costs. Additionally, some level of predictability helps in the carrier sourcing aspect of the business too.
With mindfulness towards a strategy in effective transportation management that drive capacity commitments with a myriad of select carrier partners per lane, easy pay terms and rewarding performance, shippers are making it easier for carriers to do business with them. Gaining “Shipper of Choice” status empowers the shipper to gain an awareness and understanding which in turn aids your partner carriers in tight capacity marketing. Working with carriers and all the freight you manage to create continuous movement strategies is a win-win approach.
The ability to proactively identify service disruptions is critical in today’s fast-moving communication world. One of the most overlooked success factors to shipment tracking is simply defining what the expectation is between your own company, the receiver of the goods, a 3PL, and your carrier partners. Too often the 3PL and shipper are not aligned on the expectation of shipment tracking. Does the 3PL have technology for effective transportation management allowing for the ease of communication? Additionally having a robust process, and authority to act when shipments do not go as planned, is important to effectively manage distressed shipments.
Continuous improvement in effective transportation management is now often realized by strategic shippers thanks to the increased use of technology and integrated systems providing the ability to data mine transportation reports for substantive business intelligence. This large movement towards more use of the data to glean insights created by processes within technology is known as “Big Data.” The ability to analyze the freight spend down to a single customer, at an order or even at a product level, can be a key input to developing competitive product pricing and identifying opportunities for change.
Highly sophisticated order optimization capabilities is a direct result of effective transportation management. This increased flexibility from not having to get down in the weeds of process allows a shipper to not compromise delivery requirements and freight spend budget. Technology and historical analysis of transportation data allows load planners to determine the optimal modes of transportation as well as the preferred carriers who are consistently performing.
Speaking of metrics…..Utilizing the right metrics to monitor the health of your transportation footprint and network are critical. Transportation management systems provide a wealth of information, but it can be overwhelming finding the right metrics to manage your business. Identification of key process indicators will help focus your search for the right data. It’s also important to have flexibility in generating metrics. As your business changes, so will your metrics requirements. Having the ability to transform data into usable knowledge is the goal.
As your organization expands through growth and acquisitions will your transportation management strategy and technology meet the increased demand and complexity? Having a scalable solution is critical to meeting today’s rapidly changing business environment. Integrating all your separate supply chain systems together will allow you to manage your business through a single lens. Additionally, when you have more access to your transportation spend due to housing all of your supply chain data within technology, the leaders of the business can better understand how transportation affects other parts of the business such as customer service, marketing, and sales.
A smaller carbon footprint can be had in nearly any operation via consistently and continuously seeking shipment planning options, consolidation opportunities and mode shift capabilities. As we said in our post, “Attracting Millennials to Manufacturing: Understanding Millennial Experience in Order to Gain Talent & Customers,” millenials care a lot about the future of the environment. Those shippers who build an effective transportation management strategy to include sustainability initiatives, will beat out the competition who does not.
When selecting a 3PL to aid you in a robust and effective transportation management strategy, defining the rules of engagement is critical to success. Do you even first understand your own needs? We’ve built a deep checklist to understand first before you go about engaging with a 3PL. When you do engage and hire a 3PL for effective transportation management, it is vital that you look at this relationship as a partnership and not a commodity. Empowering people to make decisions and holding them accountable for the outcome is a foundational aspect for any program. Understanding the client’s business environment and aligning the right resources to the program is a must and an onus on the 3PL you hire. There may be occasions when the relationship is challenged. Having a strong relationship and project sponsorship on both sides will ensure a successful outcome.
Does your company embrace or challenge change? Having the mindset to accept changes is critical for any 3PL to deliver value. Engaging with a 3PL or TMS software and asking them to do what we do today and expecting a different outcome will lead to disappointment. Being able to accept change is critical for the success of any program.
If you are a shipper who seems to always feel in the weeds of tactics, most likely you are not eliminating all the wastes, such as unnecessary costs or time used to manage transporation, that you could be by looking at an effective transportation management strategy driven even further by the use of a 3PL. Need help in this pivot and change? Contact Cerasis today to inquire about how we’ve helped thousands of shippers stay strategic in transportation management.
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