On the Road to Savings

Fleet managers are looking to reduce costs any way they can. Industry experts offer advice on how to minimize transportation costs and increase efficiency.


TRANSPORTATION OPTIMIZATION

Leverage Technology

Today’s advanced technology solutions can offer manufacturers, distributors and retailers relief for many of the transportation “pain points,” including rising fuel costs, ongoing driver shortages, increased safety and security concerns and hours of service requirements.

Dynamic transportation execution. Transportation execution is where the rubber meets the road, as shippers carry out their strategic plans through month-to-month, week-to-week and sometimes day-to-day tactical decision-making. Advanced technology solutions make it easier for shippers to manage their 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.

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 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 make recommendations that are optimal for the shipper’s defined business goals.

Real-time carrier communications. 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 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 to handle unforeseen events, such as supplier or shipment delays, before they become a problem. With real-time communications, you can also support advanced execution processes such as spot bidding, spot capacity, yard management and appointment scheduling.

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.

Performance tracking, measurement and analysis. What you cannot measure, your carriers will not improve. Performance management technology tools enable shippers to monitor and measure the performance of transportation providers 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 service levels.

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 to which they committed.

—Prashant Bhatia, senior director, product management, Man­hattan Associates Inc., Atlanta.

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