Poor Collaboration Represents Another Limit of Ineffective Logistics Strategies
Although the industry can embrace various technologies in systems to improve collaboration and reduce costs, it remains to be seen. According to Logistics Management, the biggest issues revolve around investment costs and problems with implementation. The irony of technology as part of the freight strategy is also vastly underrepresented. In the “2016 State of Third-Party Logistics Study,” technology strategy and implementation fell to the lowest position on the list of top concerns. But still, cutting transportation costs was noted by 63% of respondents. Clearly, a disconnect between the use of technology strategy and implementation and the ability to use it to reduce logistics spend exists. A common denominator between the two is the inability to use systems across the supply chain network. Every company has a unique system of record, and if carriers prefer to use system A, what incentive do they have to use the system operated by shipper B? As a result, collaboration declines, and companies are left running transportation management independently, failing to leverage the biggest advantage of all—real-time collaboration.
Manual Exception Management Detracts Workers and Adds to Costs
Any repetitive process will benefit from automation. In supply chain management, exception automation can have a lasting impact. Exception automation refers to the use of advanced computer algorithms, artificial intelligence, machine learning, and basic rule sets to prescribe a set of actions to follow when an adverse event occurs.
For example, if weather reports indicate heavy snowfall on one trade lane, automated systems could trigger a series of alerts to all affected drivers and provide an appropriate route correction to avoid delays. For organizations that continue operating manual exception management, it amounts to higher labor costs, potential errors in judgment, and other problems.
A Poor Freight Strategy Coincides With Poor Accounting Practices
The best-laid plans for transportation management falter without proper transportation accounting. Unfortunately, trusting carriers to correctly invoice is not the best strategy. Mistakes may and often do occur, affecting up to 10% of all invoices. Simple mistakes, such as double billing or incorrect freight classification, add up to millions of dollars in excess spend across an enterprise. So, organizations that continue operating manual, expensive, and in-house auditing and accounting practices should consider the benefits of outsourcing or invest in an automated auditing and accounting system. Moreover, outsourced auditing service providers may only charge a percentage of identified errors in recaptured costs. Therefore, shippers see immediate gains in profitability, and they do not have to sacrifice any investment up front.