Transportation Management: Weathering the Perfect Storm

With powerful market factors converging to negatively impact transportation costs, capacity-and the bottom line-shippers can apply effective strategies to weather the storm and begin to build a world-class, integrated transportation system.


Similarly, carriers gain the ability to choose the freight that best fits their capabilities, lane preferences and capacity, while shippers can feel confident that carriers will be able to deliver the service they are promising. For both parties, the resulting efficiencies save time and costs by significantly reducing the amount of time required in researching, gathering and evaluating bid data, as well as minimizing of failed performance against the awarded business.

It is important to keep in mind that the effectiveness of any automated transportation procurement process depends on the scope and power of its analysis and optimization capabilities. Intelligent analysis and optimization tools are essential to support the thought and analysis that goes into developing the best strategic transportation plan for your particular business. The plan needs to be “business optimal"-taking all critical business factors into account: freight variability, network flows, equipment requirements and carrier rates, capacity and service levels and any other factors critical to success.

Optimization of transportation procurement cannot be achieved in a single step. For shippers, true optimization calls for a whole new mindset of communication and collaboration with transportation partners, accompanied by careful analysis of business and service requirements, and carrier performance. Neither the traditional nor more current "pain points" of carrier procurement can be resolved by technology alone. Rather, success requires incremental implementation of the right infrastructure, the right process improvements, and getting the right information into the hands of the right people at the right time for more informed decision-making at both the strategic and tactical levels. This is where flexible, modular technology solutions can add the most value.

Leveraging Technology to Drive Transportation Execution
Today's advanced technology solutions can offer manufacturers, distributors and retailers relief for many of the transportation "pain points" discussed here. In addition, the right technology-process-driven and intelligently applied-can help shippers overcome competitive challenges and external market forces so they can begin to build a fully optimized transportation management strategy. Smart strategies for transportation optimization include:

Dynamic Transportation Execution. Transportation execution is where the rubber meets the road, so to speak, as shippers carry out their strategic plans through month-to-month, week-to-week, and sometimes day-to-day tactical decision-making. Here, too, advanced technology solutions make it easier for shippers to manage their complex transportation networks smoothly and efficiently. New optimization algorithms make it possible to evaluate and compare multiple transportation modes, routings and service levels, and to quickly source additional capacity should that become necessary. An effective transportation execution system is one that automatically selects the best mode and carrier based on your current rates and service options.

Progressive shippers seeking to optimize their transportation execution processes let technology do the "heavy lifting." Keeping track of the relative costs of different transportation modes, as well as the relative costs of each carrier option, is all the more critical in today’s environment of fluctuating rates and accessorial charges. A good transportation management system will evaluate the relative costs and service levels of every transportation option, and making recommendations that are optimal for the shipper’s defined business goals. For example, as fuel surcharge cost increases, LTL may be a more attractive option for shipments close to the break. A good execution system will automatically identify these opportunities.

When the plan goes awry, when shippers are confronted with unexpected events, such as demand surges, out-of-stock situations or otherwise distressed shipments, a good execution tool can help shippers cover their loads quickly and efficiently. For example, using web-based technology, detailed load requests can be sent to multiple acceptable carriers simultaneously. Carriers can respond very quickly to these ad hoc requests, which means that shippers can very effectively get multiple responses from carriers in a short time period. The shipper can then quickly sift through the bids to find the best match, award the bid and get the freight covered. This concurrent request approach for distressed freight is infinitely preferable to the time- and labor-intensive sequential tendering process, which is not always appropriate in time-critical situations.

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