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.


Real-TimeCarrierCommunications. At today's speed of business, enabling real-time communication solutions, such as EDI (electronic data interchange) and Web-based solutions, is critical for keeping in touch with trading partners, customers and transportation providers. Whether considering bid offers and counter-offers, negotiating contracts, communicating load details to carriers, or seeking carrier capacity for a distressed shipment, the days of "dialing for diesels" and spending hours (sometimes days) sending phone or fax messages and awaiting responses are over. Instead, fast, efficient system-to-system communication with a variety of carriers has proven to be the most effective way to expedite fulfillment requirements.

Rapid two-way communication is also essential in order to handle unforeseen events, such as supplier or shipment delays, before they become a service problem. With real-time communications, you can also support advanced execution processes such as spot bidding, spot capacity, yard management and appointment scheduling.

In times of high freight volumes and constrained capacity, streamlining communications and collaborating closely with carrier partners are proven strategies for improving workflow synchronization, negotiating cost-effective contracts and maintaining desired rates of fulfillment performance. The faster you can get your load tenders into the carriers' systems, the more likely you will get the trucks you need when you need them. Shippers lacking real-time, system-to-system communications will find themselves at the bottom of their carriers' lists and will be more likely to have problems getting their freight covered in a timely fashion.

Performance Tracking, Measurement and Analysis. What you cannot measure, your carriers will not improve. When transportation optimization is the goal, knowledge is power. Performance management technology tools enable shippers to dynamically monitor and measure the performance of transportation providers in real time and use that information as a basis for future carrier selection decisions. Keeping scorecards on carrier performance through analysis of current and historical data is a sound business practice that will pay dividends in the efficiency and quality of transportation service levels. Using carrier performance management tools, shippers can monitor on-time delivery rates, identify unacceptable delivery patterns over time, and even view transportation profit margins by carrier, customer, or supplier.

Shippers striving for continuous improvement should also benchmark and periodically measure the effectiveness of their own internal processes relative to velocity, throughput and profitability. The success or failure of a strategic transportation plan is just as dependent on your own ability as a shipper to follow the plan, as it is for your carriers to perform at the levels they have committed to. A good performance management approach will help identify problem areas not just in carrier performance, but in shipper, supplier, and customer performance as well.

The Importance of Yard Management
Often overlooked as an essential part of effective transportation execution are the activities that take place in the yard. The recent Hours of Service rule changes have focused attention on what has historically always been a problem area. The effectiveness of your transportation planning and execution is dependent on getting the carriers turned at pickup and delivery as quickly as possible. Automating appointment scheduling and synchronizing operations in alignment with yard capacity and layout is the best way to minimize turnaround time, avoid detention charges and maximize productivity-which can go a long way in making your freight contract more attractive to shippers. Timely and auditable yard management also enables shippers to track carrier compliance.

Improving Relationships with Carrier Partners
With the capacity crunch, fuel costs and driver shortages expected to continue, the dynamic between carriers and shippers has changed dramatically from a buyer's to a seller's market. As a result, it is more important than ever for shippers to forge and maintain strong partnerships with their preferred carriers. Central to this relationship is a strong understanding of what factors are driving carrier’s costs. In many ways, a shipper’s behavior and practices relative to shipment execution can have a significant affect on a carrier’s cost. Rate negotiation aside, a shipper can often improve the service and cost they pay for transportation by becoming a more"carrier friendly" shipper.

How then can shippers adopt a new and collaborative paradigm that makes it easier for high-quality carriers to partner and do business with them? Consider the following:

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