Logistics faces a crisis. The driver shortage appears to be worsening, customers are demanding lower rates, oversight is becoming more intense, and stakeholders demand reductions across the board. Overcoming these difficulties seems impossible, but there is a solution. Logistics providers must leverage the power of inter-management and team collaboration to continue growth in an industry that’s under a great deal of stress. Let’s take a look at how data and analytics play into collaboration, what benefits can be realized, and how the overall shipping process can be streamlined through the use of a dedicated transportation management system (TMS).
What good are data and informed decisions if the opportunity to enact change has already passed? Analytics start the conversation as to how a TMS improves team collaboration in an organization. Essentially, the system identifies variables and processes in real time, which makes insight from this information available through various dashboarding tools. In other words, analytics give rise to business intelligence tools, as discussed in a previous blog post, “Transportation Business Intelligence.” These tools make businesses smarter by allowing multiple parties in a given organization to review how their individual actions impact the overall scope of the operation. This translates into rapid identification of problems and ways to improve processes.
For example, labor costs can be reduced with a TMS by eliminating the burden of running complex reports and information analysis within internal information technology (IT) or HR departments. Users can further manage prototyping by defining variables before they become evident. This is fundamental to mitigating risk in the logistics industry. By giving rise to actionable information, business intelligence lends itself to faster, data-driven decision-making. In logistics, the decisions may range from scheduling workers within a warehouse to route optimization and freight consolidation. However, the benefits of these tools have further benefits for team collaboration and inter-department management.
Decisions are a basic part of effective freight management. As a result, departments across an organization must make thousands of individual and collaborative position at any given time. Traditional management methodologies focused on allowing each department to work independently of one another. While this sounds beneficial, it actually leads to an increased risk through errors. If department A does not communicate well with department C, department B could easily ship to and bill an incorrect party. Obviously, errors happen, but consumers have no patience for errors. Consequently, managing an operation in the logistics industry requires all departments to know what other departments are doing and what each department can do better to realize cost savings and improvements across the organization in real time.
Inter-department management and team collaboration do not only impact a single organization either. The logistics industry has reached a point where collaboration between previously competing partners is necessary to meet the demands of the customer. If a given shipper where to forgo freight consolidation in an effort to eliminate contact with a competitor, such as one of the “Big 3,” the shipper will have a harder time maintaining competitive rates. In other words, collaborative distribution leverages freight consolidation, explains Inbound Logistics magazine. This occurs as fuel costs rise, drivers demand better pay and consumers demand lower rates. When considering these factors, the equation becomes more complicated as DIM pricing replaces outdated freight classification systems. Rather than devoting more resources to pricing systems to account for collaboration outside a company’s internal capabilities, the TMS should be able to handle all needs and requests. Additionally, the continuing growth and development of cloud-computing technologies are reducing the physical and technical requirements of integrating newer TMS systems with existing operations, allowing cost savings to be realized even faster.
Before discussing the benefits of the TMS, the problem needs to be identified. Inefficiencies abound throughout the logistics industry. According to Joel L. Sutherland of the Center for Value Chain Research at Lehigh University, trucks run empty more than 20 percent of the time. This means all fuel, time and operating costs could be immediately decreased by 20 percent if this problem were eradicated. However, drivers cannot reasonably know where every shipment is, where it is going, and when it will be leaving at any given time. Meanwhile, value-added services result in fewer problems with inventory management and reductions in administrative costs and driver turnover rates, among other improvements in workflow.
A TMS needs to be able to review these operations in real time to make the decisions for the respective drivers, distribution centers and other areas of operation. This leads directly to streamlining all processes in an organization within a single resource.
Pricing models for freight shipping are changing, and attitudes in the industry reflect the growing concerns of society. From gaining a competitive advantage and driving conversion rates through analytics to determining inaccuracies and best practices with a TMS, team collaboration and inter-department management will become key focuses in the logistics industry in 2016. While legacy systems served their purpose, a modern TMS, such as the Cerasis Rater, will transform how well an organization functions and serves its employees, stakeholders and customers.
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