After deploying a transportation management system and managed transportation services solution, shippers can often shift their focus from tactical execution to more strategic initiatives. An example of such an initiative is improving carrier relationships and overall performance through collaboration and evaluating important transportation metrics.
This is an area of transportation management that can yield huge benefits. The performance of transportation service providers is critical to the efficiency of the freight network. A TMS combined with managed services can identify opportunities for improvement that were not apparent prior to the system’s implementation. Some call the ignorance of not knowing, bliss, we call it an opportunity to lose money out the back door.
There are a number of reasons why managers who do not have the support of TMS technology can find it difficult to keep up with the strategic demands of their freight networks. They might lack the in-house resources needed to work on these issues, or are simply too busy with tactical, day-to-day management tasks to spend time on logistics strategy.
The problem gets worse when the freight network is reconfigured in response to major changes such as a shift in the direction of the business and without a strategic view of transportation practices, often, business decisions are made without attention paid to the logistics side of the house. When this happens, the tactical workload often increases putting even more distance between in-house transportation managers and strategic issues that need their attention.
One of the issues often neglected is poorly performing carrier relationships. Here are some ways in which this type of service failure can damage a freight network.
Tender Acceptance Rates Too Low
A shipper may be largely unaware of unacceptably high load rejection rates in the freight network. The lack of attention can be costly. Take, for example, a situation where freight volumes are peaking and the shipper has short lead time orders. Carriers in the route guide decline the business and the shipper has to resort to the spot market where they pay top dollar for capacity.
With the implementation of a TMS, managers have the ability to shift their focus to developing route guides that reduce rejection rates and lower costs, even during spikes in volume.
Declining Route Guide Depth
Freight managers are going lower and lower in the route guide to find capacity, but do not have the time nor the level of visibility to address the issue. Perhaps the rates offered by the top carriers when they first won the business are no longer valid, and these transportation service providers are going elsewhere for loads.
With the benefit of a TMS solution, the managers can realign the route guide. They can weed out the carriers at the top of the route guide that are not accepting tenders, and avoid using low-tier providers that are more expensive and less efficient than first-choice incumbents.
On Time Delivery Shipping
Consider a situation where customers are complaining that on time delivery rates are below agreed levels, and want to impose fines for the shipper’s sub-par performance.
A transportation management system and managed transportation services can help in a number of ways. For example, the TMS can reduce the shipper’s reliance on anecdotal delivery information that may or may not be accurate. Also, with the benefit of reliable data on deliveries as well as root cause analyses, the shipper is able to respond to the accusations much more authoritatively.
Planning for Seasonal Peaks
Happy Halloween! And you know what that means….coming into the PEAK shopping season (or for some, a down time!). As mentioned above, capacity is often scarce during peak demand seasons. Finding trucks during these periods is even more challenging for shippers that have failed to effectively manage their relationships with carriers.
TMS solutions can help shippers to plan for spikes in demand by, for example, identifying carriers that may be open to the possibility of more freight in return for assisting when capacity is in short supply.
Aligning With Service Providers
When carriers and shippers are not on the same page, the result is often miscommunication and a lack of transparency.
A TMS can help to keep the parties in synch by providing common performance data. This is particularly important when there are multiple carrier locations for single customers, and the flow of information between carrier and shipper is complex. At Cerasis, one of our main goals is to use EDI, APIs, and web services for most of our carriers so this interchange of data occurs from our carriers to our TMS for maximum visibility with such features as auto-pickup and notification of where shipments are in the process of shipping.
In some cases the nature of the business is not conducive to the close monitoring of carrier performance. Take, for example, a shipper in the mining equipment sector, where customers are widely dispersed and only require a handful of shipments per year. It is difficult to develop rich data sets on transportation service providers when shipment activity is low and confined to a few lanes.
Although a TMS solution will not change a low-volume business model, it will enable the shipper to better manage the carriers they use and to develop analytics tailored to their freight network.
Outside of these key performance areas, shippers that adopt a TMS and managed transportation services solution can get creative in the way they spend time on strategic areas of freight network management.
When shippers can have this information that is accurate and factual, then real business conversations and relationships can start building. When trust and a true partnership are formed, then collaboration can happen. Collaboration begets sustainable solutions for both parties and an overall bottom line savings occurs.
The potential for developing solutions like these becomes greater when managers have the time, the data, and the analytical support to focus on strategic issues. Working with a transportation management solutions provider who can offer you both technology and services will undoubtedly allow you to start forging these successful relationships and thus help your business scale and grow.