July 2012 | Sponsored | Thought Leaders

Developing a Comprehensive Transportation Strategy

Tags: Transportation Management Systems (TMS), Transportation

Dan Vertachnik is Chief Commercial Officer, MercuryGate International Inc., 919-469-8057

Q: What advice do you have for companies attempting to optimize their inbound freight?

A: It's worth the effort. Traditionally, companies have focused on low-hanging fruit, such as improving efficiencies and reducing outbound transportation costs. Overlooked is the more difficult task of managing inbound transportation, which can often be multi-modal, multi-leg, and international.

Companies need to think outside the box to find ways of overcoming traditional roadblocks: poor data quality, lack of trading partner collaboration, limited visibility, and not enough communication between purchasing and logistics departments.

Fortunately, the playing field has changed for inbound logistics with the emergence of the functionality-rich, on-demand enterprise transportation management system (TMS). Now it is possible—and affordable—for companies to take control of their entire end-to-end transportation network, allowing them to maximize leverage, own carrier relationships, improve efficiencies, reduce inventories, and maximize cost savings.

Q: What does the future hold for inbound transportation planners?

A: Advancements in transportation technology are occurring more rapidly than ever. It's all about control—you need to arm transportation planners with the best transportation management technology to give them the control they need to provide a competitive edge for your company. Companies are replacing their outdated freight management tools with new systems that give planners visibility to the company's entire transportation supply chain—inbound and outbound—and allows them to plan across the entire network to drive improved service and lower cost.

Planners are increasingly responsible for working with purchasing departments to reduce the total cost of sales, and for evolving the transportation department from a traditional cost center to a profit center. The ability to route, plan and optimize, select carriers, tender, track and trace, manage exceptions, and automate and manage freight audits will be common practice for inbound planners of the future.

Q: What is the most common mistake that companies make when trying to improve their inbound logistics?

A: Not having a plan. Many companies don't have a comprehensive transportation strategy because of top-down initiatives developed at the corporate level. The cost-cutting culture that often prevails in today's boardrooms can negatively affect logistics departments. Taking action for short-term gain can distract companies from doing things the best way. An overall transportation strategy includes short-term and long-term goals, and initiatives across more than just the logistics department. A sound strategy takes into account inventory planning, vendor compliance, partner collaboration, leveraging the entire transportation network, customer demand, and fully landed product cost, among others. A rich and robust TMS plays an important role in a company's inbound transportation strategy.