The Answer to Logistics Problems is Always in the Data
Q: How can data solve logistics problems for shippers?
A: The right data can create the intelligence required to know where to begin to solve many common problems. These can include freight costs that are too high, transit times that are too long or not charging enough for freight. Many shippers have good rates, but they aren’t using them correctly, which causes a problem of spending too much. Having the right data will show how to change this.
Q: What data is best?
A: Data must provide the proper context to answer the question "why?" Why did we use that carrier for this shipment? Why did the shipment have to be expedited? Why did we underestimate the freight cost?
To answer these questions, a shipper needs four datasets to be integrated, cleansed, and standardized: 1) shipment data; 2) freight invoice data; 3) track & trace data; 4) order & item level data. The shipment data shows how the freight was prepared (weight, pieces, dimensions, and accessorials). The freight invoice data verifies what really happened (Were measurements correct? Were other accessorials required?). The track & trace data shows if any exceptions occurred once the freight left your warehouse (weather delays, mechanical problems, etc.). The order and item information shows what was shipped and to whom (Was it a back order? Is this a customer with a specific routing guide? Does this item require special handling? etc.). By having all four datasets, you now have the proper insight into why, and it helps you understand what you can do (if anything) better.
Q: What analytics best reveal the answers to problems? How can analytics drive strategy?
A: Analytics must be real-world. The two most popular ones we see show the shipper how well they are following their current strategies, and how much their constraints are costing them. The first is called "Lost Savings," which shows the shipper how much it costs not to follow their own strategy. The second is called "Lost Savings by Constraint," which shows how much each routing rule is costing the shipper. These two analytics help a shipper successfully implement a strategy by ensuring their Lost Savings is zero, and will show which routing rule should be examined when developing the next strategy.
Q: What’s the payback for investing in data analytics for logistics management?
A: The payback for investing in data and analytics can be almost immediate. We see many shippers throttle their own strategies to fit their current systems. Once you have data, it’s easy to make the business case internally to make the strategic changes that are found in the data.