Managing Transportation: Insider Tips and Winning Strategies
Transportation management has become increasingly complex and challenging. To help you cope, Inbound Logistics asked the experts to share their brightest advice.
Keys to Transportation Management in Uncertain Times
In the wake of the pandemic, supply chains everywhere must navigate shipping delays, labor shortages, and production shifts. Transportation management has become particularly challenging, but there are steps manufacturers, distributors, and retailers can take to reduce costs, mitigate risks, and keep products moving.
Alleviate carrier pain points. "Shipper or receiver of choice" cannot be merely a buzzword. To ensure capacity, shippers and receivers must understand what makes for a positive driver experience at their facilities and adjust processes and amenities accordingly. Fast check-ins, reduced paperwork, and contactless digital payments keep drivers moving and decrease waste. Efficient drop trailer management and yard workflows reduce unnecessary bottlenecks. Even simple tweaks, like making sure staff members treat drivers with respect and providing clean and accessible restrooms, can help shippers retain carriers and avoid tender rejections.
Utilize bid management technology. To protect against volatility, shippers often run "mini bids" with shortened contract cycles. This strategy works, but may require significant time and effort. Deploying smart bidding technology to accelerate the RFP process can help shippers avoid too much resource drain. Tools that aggregate historical data and provide market intelligence can also enable faster decision-making and better purchasing.
Integrate first, middle, and last mile. When possible, hiring a single-source logistics partner to take shipments from manufacturer to warehouse to end customer can create numerous efficiencies. This holistic, integrated approach allows for better accountability and control, plus end-to-end visibility that shippers cannot get from working with disparate providers.
Think beyond the linehaul rate. When hosting procurement events and evaluating transportation partners, the linehaul rate is not the only factor to consider. Shippers must look at the total value package offered and examine the cost of unplanned charges due to service failures. Aligning with service-oriented partners that have strong relationships with receivers and programs to support shipper and receiver of choice initiatives can reduce total transportation costs in the long run.
Reward key partners. Shippers should measure key performance indicators (KPIs) like primary tender acceptance, spot inflation, and on-time delivery to identify top carriers per lane. Offering exclusive, pre-bid opportunities to best-performing incumbents or even higher rates on well-managed lanes can incentivize those key partners to go above and beyond when markets tighten.
Diversify truckload and last-mile providers. As shippers shift distribution networks, they must build out reliable carrier networks to handle new shipping patterns. It is important to select the right mix of large asset-based providers, regional or niche providers, and brokerages with access to scalable capacity. For last-mile shipments, many retailers add regional, local, and crowd-sourced carriers to their traditional mix of providers to ensure capacity, reduce costs, and limit delays.
—Rick Tomcho, President, Capstone Logistics & Member, Customized Logistics & Delivery Association
6 Ways 3PLs Can Save Businesses in 2022
Finally, 2021 is behind us. Yet many supply chain problems persist and businesses around the country are still trying to plug holes in their logistics networks with duct tape and glue. The vicious cycle of delays and shortages are likely making you wonder how you'll get through this year unscathed.
Here are six ways that third-party logistics (3PL) providers can help you keep a closer eye on your business and better leverage existing relationships.
1. Identify opportunities with carriers. Well-established 3PLs have insider information about when windows of opportunity open throughout all transportation modes. They know what carriers want, including the types of volumes and cargo they want to carry, what concessions they're willing to make, and how to gain "preferred shipper" status.
2. Longstanding relationships unlock doors. Many businesses are blocked from working with certain carriers simply because they lack established relationships that open doors. In turn, an incomplete freight request for quote (RFQ) can prevent carriers from even providing your business with a quote. An experienced 3PL typically has longstanding relationships with many carriers that can help you get a foot in the door. They can also scrutinize RFQ responses and correct inaccuracies in your data so carriers will respond and carry your shipments.
3. Eagle eyes catch unnecessary charges. While some rate hikes and surcharges are due to increasing costs and persistent shortages, carriers sometimes tack on extra costs to make up for past oversights. It often takes an eagle-eyed professional to identify discrepancies and negotiate corrections. This is where an experienced 3PL shines. In fact, an invoice audit typically saves anywhere from 5 to 50%.
4. Get preferential treatment. The surge in demand for product is here to stay and shortages are likely to continue into the near future. By working with a well-connected 3PL, shippers can increase the odds of freight getting picked up and delivered faster—rather than sitting in limbo at a terminal or on a loading dock for hours or days.
5. Access to real-time visibility. Having real-time visibility through a transportation management system (TMS) can be a game-changer. Many 3PLs use TMS portals to track which shipments are running on time, which have arrived damaged or short, and which had significant status changes. This can help you monitor your transportation operations while there's still time to take action and get your shipments back on track.
6. Purchase and manage buffer inventory. The merits of keeping more safety stock comes into question with transportation and labor shortages and COVID-related factory and port closures. Working with full-service 3PLs that have distribution centers and manage your extra inventory can be a great alternative to housing buffer inventory in house. Some 3PLs are willing to purchase and fully manage your goods while they're in transit—which lets you put off payments until you need them and reduce your supply chain risk.
—Andy Dyer, President, Transportation Management, AFS Logistics
5 Things We Learned in 2021
"Supply chain disruption" was a defining theme of 2021—from port congestion, to a ship getting stuck in the Suez Canal, the year was rife with challenges. How can shippers better shore up their supply chains during these volatile times? Here are 5 tips we learned in 2021 that may help you this year.
1. Shift your thinking from lowest cost to highest value. Whether it's getting slots on vessels, finding trucks, or securing warehouse space, capacity is in high demand across the board. Think of managing transportation like an auction—available capacity often goes to the highest bidder. Be prepared to spend when you need to, and don't be afraid to pay more to guarantee service. Your competitive advantage in this environment is knowing your freight will move when you need it to.
2. Broaden and connect your vendor network. The pandemic exposed just how fragile the supply chain ecosystem can be. Improve your resiliency by assessing alternative routings and diversifying your vendor base for all links in your supply chain. A larger partner network means a larger selection of solutions for your company and your customers. Also connect those vendors in a single eco-system control tower, and if that's not possible immediately, bring vendors together regularly to maintain alignment on your goals and challenges as they support you as a team, not a collection of independent contractors.
3. Increase inventory levels and add storage space in multiple markets. The pandemic accelerated a shift from just-in-time to just-in-case—highlighting how important it is to build extra inventory into your plans. Ensure you have contingency goods available to meet unexpected demand spikes or unexpected delays.
Additionally, there is an e-commerce-fueled shift to position inventory closer to major population centers. Having product in multiple locations brings agility and flexibility, helping you get those goods to your end customers faster. This is essentially a requirement when customers expect next-day delivery.
4. Revisit your strategy and regularly review it. Now is a great time to review your supply chain strategy. Consider alternatives like cross-docking and transloading in port-adjacent warehouses. Use forecasts to help guide decision-making and develop plans to mitigate disruptions and delays. Make sure all stakeholders, including your vendors, understand your strategy and the steps needed to implement it—this is a team effort!
Also stay informed. Sit down on a regular cadence with the team. Look at trends in capacity, congestion, and blank sailings, and adjust as needed.
5. Consider working with asset-based partners. Many larger retailers bought their own equipment and chartered their own ships to get around delays. Partnering with an asset-based 3PL provider can be advantageous for shippers who don't have the resources to manage their own space and equipment. Knowing your partner has chassis, trucks, and warehouses gives you extra security when demand for capacity is high.
—Michael Van Hagen, Sr. Vice President, Supply Chain World Distribution Services
Transportation Management Relies on Building a Strong Team
These are the best of times; these are the worst of times. If you are involved in any way in today's global supply chain, it's indeed easy to feel both emotions simultaneously. Regardless of whether you are in extraordinary or ordinary times, one thing remains constant—managing a transportation network is reliant on having a strong foundation at all times.
In football, poor performance on the field often results in the coach calling for a basic skills practice the next day. Today, as an industry, we often need to go back to block and tackle exercises to address operational snags, looking deeply into our operations—right down to the fundamental level—in order to ensure our assets, our relationships, and our team are fully optimized.
Maximize your assets
During difficult times, fully optimizing managed assets remains the key to success. To do this, various fundamental questions need to be answered: What is the status of the assets? Are they in ready condition? Are the assets located where they need to be? Do we have enough assets to meet the projections, or do we need more?
Business uncertainty is often connected to a lack of properly monitoring operational fundamentals. As such, it is important to review these business basics as part of your regular team meetings. The goal is to reinforce the significance of a strong foundation, which serves as the building blocks for a successful operation.
Collaborate with business partners
Strong business partnerships are essential for any successful business and this is especially true during tumultuous times. When a business challenge arises, you need to be able to rely on the strength of your relationships, including vendors, suppliers, technicians, and distributors. In effect, your business partners are an extension of your team, so treat key relationships like true partners during your regular business practice so they are there for you during difficult times.
How to attain this type of close partnership? Create a communicative, collaborative relationship that includes regular meetings to learn about their products and services, providing honest feedback and outlining your needs. In fact, this ongoing dialogue not only builds relationships, it also helps improve quality and performance.
By keeping the lines of communication open with business partners, you will be able to call upon their assistance during unforeseen challenges. Leveraging these vital connections can be the difference between making your deadlines and losing a customer.
Build knowledgeable, prepared teams
When reviewing the fundamentals of any successful operation, you cannot overlook the importance of investing in your team to ensure they are prepared, agile, and knowledgeable enough to weather the storms that will come their way. Providing hands-on training and career growth during traditional workdays not only prepares your team for unexpected volatility, but also builds loyalty and commitment to your business.
Members of a strong, loyal team feel compelled to stick it out during tough times for the good of the business. In logistics, like football, we only win if we are willing to work together and push past obstacles—as a team.
—Gene Bambach, Director, Business Partner Relations, Consolidated Chassis Management
Drill into Supply Chain Data with Network Optimization
When the annals of history reflect back on the pandemic and its seismic impact across the world, the gridlock thrust on global supply chain logistics will likely be more than a footnote. Volatility is everywhere with port logjams, capacity constraints, truck driver shortages, component back orders and production delays. Times like these, however, can illuminate opportunities to change and improve the way products move to and from your organization. A network optimization study is a prime opportunity to increase operational efficiencies.
Network optimization studies provide visibility into your entire supply chain and deliver insights you can use to improve operations and reduce costs. For many shippers, data is often embedded across multiple spreadsheets, which makes it challenging to get a clear picture of supply chain hits and misses. This lack of unified visibility makes it difficult to clearly understand if product mapping is poor, standardization is lacking, or if various regions have different shipping priorities and protocols.
These statistics put a finer point on the need for visibility through network optimization. According to the Logistics Bureau, 69% of organizations report they do not have full visibility into their supply chains. Furthermore, businesses with optimal supply chains have 15% lower supply chain costs and less than 50% of inventory holdings.
How a Network Optimization Study Works
The first step in a network optimization study is harnessing all of your organization's relevant data. It might sound like a daunting task, but the key to streamlining the process is the creation of a "digital twin." The digital twin consolidates all relevant supply chain data and provides a granular view of critical data elements—including volume, origins, locations SKUs, materials, product weight, and transportation costs. Through this process, you see your lanes and flows in real time and understand your true total cost to serve. You can also weigh potential tradeoffs and separate opportunities that will improve your supply chain network from those that won't.
The next critical steps in network optimization modeling use sophisticated business intelligence (BI) tools. This takes your data from being visible to actionable, leveraging easily consumable, visual digital representations of your targets for improvement. Through these visualization tools, you can select different scenarios, view various strategies and calculate potential outcomes that can improve your supply chain operations and drive down costs.
Is Your Organization Ready?
As with most things, timing is everything. Supply chain leaders need to recognize opportunities for improving their shipping operations. Leadership needs to be willing to make changes based on the information revealed through the study.
The team involved also matters—you need a mix of internal subject matter experts who understand sourcing, production and operational flow as well as non-logistics stakeholders from other areas of your organization to get the most accurate and actionable picture possible. A network optimization study is the perfect way to improve operations, in pandemic times and beyond.
—Robert Boyle, PMP, Vice President, North America Managed Logistics Services, Odyssey Logistics & Technology Corporation
Location Technologies Critical to Supply Chain Optimization
Not all supply chain challenges are new, but some have grown in scale and impact over the past 18 months. These include a lack of actionable data and service quality, maintaining profitability while meeting increasingly shorter delivery windows, and the growing need for data privacy, security, and compliance.
Several of these friction points can be linked to technical challenges, including a lack of data analytics and visualization in current tools, limited mapping capabilities, the inability to support service app creation and customization, and data enrichment and privacy issues like security breaches.
Transportation and logistics providers require safe, reliable, and compliant routes, guaranteed on-time shipping and delivery time windows, thorough analysis of driver behavior and safety levels, improved asset utilization with fewer vehicles, drivers, and vehicle maintenance/downtime, and the ability to drive enhanced business growth and customer satisfaction.
Robust, secure, and scalable location platform technologies help address many of these friction points. Highly accurate location data enables critical visibility to make more up-to-date decisions, avoid unnecessary delays, minimize inefficiency, and reduce additional costs. These location solutions empower drivers with enhanced, safer options and a more efficient shift. Transportation and logistics professionals seeking a best-in-class solution should prioritize one that integrates enterprise-grade location data, services, and tools to solve complex logistics problems and uncover new, actionable insights.
Location data is integral to every aspect of logistics, from planning to execution and post-trip analysis. Using location data and technology platforms means fleets can quickly and flexibly generate location solutions and insights to match their unique needs across every stage. These include:
Service creation and customization: Examples include routing application programming interfaces (APIs), traffic information, and truck restriction information that allow fleets to regularly predict reliable Estimated Times of Arrival, which enable them to deliver goods within committed time windows, improving customer satisfaction. Fleets can customize location services by combining their own data with third-party sources and specifying parameters to create custom business logic to meet their unique business needs.
Application software development kits (SDKs): Enable fleets to build tailored mobile solutions for drivers, empowering them with navigation, job scheduling, workflow management, and more.
Analytics and visualization: Fleets can explore, analyze, and visualize location data, prepare and enrich data with location context, and apply machine learning techniques. Managers can use this to boost safety levels, improve usage-based insurance pricing, or support compliance management.
Location-centric data and data enrichment: Rich, accurate maps provide the freshest data for fleets, as well as multiple cross-industry datasets, including weather, road conditions, and third-party probe data. These platforms enable integration into existing systems and business processes.
Mapping: Private, custom maps using a fleet's own data—probe data, light detection and ranging data, and sensor data—can be used with location services to enable enterprises to solve complex logistics when there are no maps in the public domain.
Data privacy: Comply with government regulations and customer privacy obligations. Solutions can ensure data privacy and compliance, while maximizing the utility of big data at scale. Fleets can instill trust across value chain participants and avoid privacy breaches through anonymization and consent management.
Exchange and monetization: Provides an additional channel for revenue generation through the datasets. Solutions can act as a neutral environment for pooling datasets across multiple industry participants.
Robust and secure location platform technologies that integrate enterprise-grade location data, services, and tools can be used to solve complex logistics problems and uncover new, actionable insights. Dynamic routing based on real-time events allow drivers to minimize delivery times and make more deliveries per shift, maximizing productivity and profitability.
A strong location-based solution allows fleet managers to perform driver performance analysis to better understand driver behavior and get a location-centric context of the route. They can rapidly analyze journeys to determine what is impacting performance and quickly provide insights to take swift action for safety, savings, and compliance.
—Susan Beardslee, Principal Analyst, ABI Research