Best Practices for Effective Carrier Management
Q: Can you share some best practices for effective carrier management?
A: There are three that I always recommend. First, seek a TMS platform supporting the use of carriers of all sizes—small to mid-sized to large. It should support EDI and other contemporary technologies utilized by the larger carriers, but also deliver things like a mobile app and online portal for small carriers. There is value unique to carriers of all sizes, and a shipping organization is strengthened by its ability to harness the unique benefits of all carriers.
Next, focus on solutions providing exceptional performance measurement capabilities. It's the cornerstone of the strong carrier relationships shippers need to succeed. The best solutions provide clear, regularly reported metrics not just to the shipper, but also to the carriers themselves. When given access to their own performance metrics, carriers may correct problems before performance challenges become an issue with their shipper/partners.
I also suggest shippers engage a TMS solution flexible enough to offer this level of collaborative performance monitoring across all modes—not just truckload, LTL and intermodal, but also consolidators and parcel shippers. Many shippers don't realize that these other modes have grown capable of integrating with TMS and other logistics IT solutions, and can send EDI or flat files to facilitate status updates from all modes.
Q: What are some key carrier management metrics shippers should examine to support the good relationships you described?
A: Metrics surrounding carrier performance are essential because they ensure you're putting the best players in the most appropriate positions, consistently across your transportation network. I suggest setting KPIs for metrics such as:
- On-time performance
- Check call compliance
- Accuracy of data entry
- Timeliness of status updates
Monitoring and analyzing these few critical metrics can really strengthen a shipper's position when it comes to periodic rate negotiations with carriers.
Q: What carrier management functionality should shippers seek when selecting a TMS?
A: It's all about collaborative capability when it comes to harnessing carrier performance metrics as a productivity/efficiency-boosting tool. The leading TMS solutions are categorically cloud-based because of the cloud's proven collaborative capacity. Moreover, top cloud TMS tools are designed to automatically generate and distribute performance scorecards to all relevant parties—carriers and shippers alike. Gone are the days of manually compiling carrier scorecards. They also support exception management, issuing exception reports automatically whenever a carrier is out of compliance with business rules.