Take a moment to think about a mundane task — putting a jigsaw puzzle together. It’s a straightforward process, comparing the image on the box to pieces that fit together. Now, imagine all those pieces scattered on the floor combined with two other 1000-piece puzzles. One more thing, each puzzle is a two-sided item, and both images contain a lineup of dogs. Do you really want to take the time to sort through the mass, or would you consider buying all new puzzles to simply keep the pieces and information separate? Now think about that in managing transportation.
This extreme analogy highlights critical factors and differences that can make or break a shipper’s profitability from poorly managing transportation. Fortunately, utilizing a transportation management system (TMS) can help overcome these key challenges and ensure you can find the best-priced rates, which are the clear choice for 94% of shippers, says FleetOwner.
The biggest issue with handling transportation management manually might seem obvious. Anything can be tracked in Excel, but does your organization have the time and resources necessary to develop individual formulas for each shipment, update information from carrier rates, as well as consider the additional details that may affect a shipment price, with a single spreadsheet open? I didn’t think so, so why would you put your organization through that trouble?
The only thing worse than managing freight with a basic spreadsheet is using paper-based systems. The systems are incredibly static, reflecting on the information that was as accurate as possible at the time it was printed or otherwise edited. Moreover, a mistake or issue could lead to the total loss of your entire spreadsheet. Think of the spilled coffee or accidentally tossing the spreadsheet in the trash. Your whole operation goes out the door. Depending on your sector, your clients may refuse to work with paper-based systems.
We are in the modern age, and customers expect to see different freight shipping options available at the time of checkout. While customer-facing platforms will usually provide the time frames for delivery and costs, your organization needs to ensure these details are presented with the best in mind. Simply working with one carrier is not enough to secure proper freight quoting and will only worsen your issues as general rate increases return in mid-2019, explains Supply Chain Brain.
Even more complicated than the use of multiple carriers is omni-modal transportation, taking advantage of freight consolidation and deconsolidation to secure the absolute best rate possible. Unfortunately, it is flat-out impossible to plan for both consolidation and deconsolidation of freight for multiple modes across multiple carriers manually. The potential combinations are infinite, and that fact is only going to increase as new modes become available, including drone delivery and more.
In the digital supply chain age, data is everything. Shippers that do not access and apply data will face the threat of two minds as companies unlock the secrets to drive freight spin down, rework their supply chain networks and develop new shipping strategies. The lack of insight into freight spend, and patterns can also have adverse effects for your entire team, including higher labor costs, poor performance, decrease customer service, and even freight refusal by carriers.
Poor capability within your operation will inevitably create bottlenecks in both inbound and outbound freight. Companies fight for the attention of freight carriers to gain “Shipper of Choice” and competition with Amazon, the value of that carefree coating will become even more critical. At the same time, companies that do succeed in managing freight with nominal resources will suffer setbacks due to limited scalability, so even those with minimal processes in place today will face higher demand for a TMS in the future. Demand for better scalability is also supported by the 33% gain in TMS use since 2005, explains FleetOwner.
Without the use of a transportation management system, freight handlers and shippers may have problems managing the finances of the business. Believe it or not, most shippers will experience instances of overbilling. Since carriers are not in the business of passing money back out to their customers, such situations will go overlooked. It is up to each shipper catch these errors and issues chargebacks. In effect, utilizing a TMS enables better auditing of transportation accounting records and all documents for that purpose.
Many other challenges arise when a shipper fails to utilize a TMS. Stretched operations may result in delays in processing customer orders. The company will spend more money on freight transportation. It may be difficult to manage risks, including processing cargo insurance claims. Finally, limited carrier diversification results in a total lack of any bargaining chip when it’s time to renegotiate carrier rates, which is that nightmare puzzle scenario, and it has another name– reactive shipping. Reactive shipping is based on taking the minimal steps necessary right now to simply move freight regardless of its cost and adverse effect on your business. Instead, do something about it by implementing a TMS and finally leverage the latest technologies for managing transportation.
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