Freight analytics refers to a set of algorithms that meticulously comb through the mountain of freight data to unlock its potential. According to Research & Markets, their value is further evidenced by their growth. Recent research indicates the freight metrics and analytics market will swell to more than $27.4 billion by 2024, presenting new opportunities to both established and newcomers to the industry. Specifically:
“Increasing population and growing adoption of connected and smart technologies in transportation infrastructure are expected to drive the overall growth of the transportation analytics market.
The transportation analytics market is driven by various factors, such as connected and smart technologies in transportation infrastructure. However, recovering ROI from legacy systems hinders the growth of the market.“
Let’s review why shippers need freight analytics, how analytics contribute to supply chain value by providing more overall logistics visibility, and what shippers need to do to build the right freight analytics within their organizations.
The Invaluable Role of Data in Freight Management
Why Do Shippers Need Analytics to Improve Productivity?
While the use of analytics can transform supply chain management into a model of efficiency, it helps to understand why this transformation occurs. Analytics gives shippers an opportunity to understand what is happening, what may happen, and what needs to happen to improve productivity. Meanwhile, shippers continue to face the same demands from supply chain partners, executive-level leadership, and customers. Everyone wants faster, more affordable, if not flat-out free shipping, and more productive operations. Furthermore, consider these key reasons why shippers need freight analytics to improve productivity:
- Shippers are continuously being pushed to reduce monthly spend on freight.
- Insights into the average cost per pound of product’s shipping cost will go a long way in determining product pricing and building logistics costs into product price points.
- The average cost per mile is another metric gathered from analytics that helps shippers continuously improve, and the same applies to average lane stats.
Ultimately, freight analytics guarantee visibility measures that add value and aid shippers in reaching their desired outcomes.
Freight Analytics Enable Responsiveness Within the Supply Chain
When it comes down to the basic business case, freight analytics enable responsiveness within the supply chain. As explained by Jeff Turner of the Journal of Commerce, new directives within the supply chain necessitate near-perfect performance.
“Shippers, up to this point, have relied on their carriers to report on-time performance — but now that the consignees are monitoring closely and applying punitive punishments, they’re finding they can’t necessarily rely on carrier on-time reporting. Here’s another place where technology is increasingly playing a role. Both the shipper and consignees need to document exact in and out times for all their shipments — and while it may seem inconvenient at first, that data can be turned around and used to help shipper efficiency across the board.”
Now, shippers have an opportunity to collect and apply data themselves, identifying potential problems with carriers and working to intervene when things fail to go as expected. Thus, freight analytics share a common goal—enabling responsiveness to lower freight spend and boost continuous improvement through all operations.
How to Build the Right Analytics in Your Organization
Analytics are expansive and cover every aspect of your organization. While various supply chain analytics can be created to specific data, it is best to follow a few tips when building and implementing analytics in the operation, including:
- Work with carriers that are utilizing connected assets including ELDs and GPS sensors to understand where freight is right now and where it’s going.
- Measure spend and locations regarding freight, providing segment-level insight into how to better improve shipping.
- Make compliance with all measures and reporting mandatory throughout your supply chain.
- Create disciplinary actions that will take effect when carriers or suppliers fall out of line.
- Improve performance on the fly by giving others access to performance analytics’ insights and improving efficiency.
Put the Power of Analytics to Work in Your Enterprise With the Right Logistics Partner
Freight metrics and analytics are the latest and most innovative ways for shippers and supply chain professionals to connect and understand their operations. Connecting the data opens the doors to new insights and improves collaboration, resulting in downstream benefits, up to and including better customer service, regardless of whether it is a business-to-business or direct-to-consumer transaction. It all starts with choosing the right logistics partner.