Ditch the Spreadsheets, Implement a TMS
Q: How can value chain partners cooperate to create and share efficiencies?
Vanselous: It amazes me that so many shippers and carriers still rely heavily on manual processes in daily transport operations; only 38 percent of companies currently use transportation management software, says AMR Research. Ongoing cooperation with value chain partners is possible with integrated transportation management software for optimal resource utilization, business efficiencies, and cost control. With effective systems in place, communications efficiencies from EDI, XML, Web portals—even IVR systems—can eliminate thousands of hours of manual data entry and attendant errors.
A TMS that helps improve load consolidation, routing, best-carrier selection, and rate and contract management not only saves shippers money, but reduces carbon footprints, lowers freight audit requirements, improves service performance, and increases shipment visibility. These cooperative benefits are not available to companies that still rely on phone, fax, and spreadsheets to manage transportation operations.
Q: Trucking capacity has contracted dramatically because of the economic downturn. How can shippers defend against upward rate pressure when an improved economy finally triggers increased freight volumes?
Vanselous: The frequency of bid requests rises to capture more savings when rates are falling. But during an upturn, shippers will try to lock in lower rates by reducing the number of carriers they use. Ironically, shippers often can't realize the full benefits of tactical procurement activities because they don't have a centralized, automated transportation management operation. Organizations that do not manage carrier selection with a TMS can't pick the lowest-cost carrier every time. Shippers leave money on the table in both pricing environments when they rely on manual methods for logistics planning and execution.
Working cooperatively with value chain partners can yield unexpected savings opportunities. Shippers that align themselves with good carriers—integrating TMS software and cooperatively looking for opportunities to reduce freight costs—create an environment for systematic cost reductions and service level improvements, regardless of the direction rates take.
Q: What innovative sustainability initiatives also increase efficiencies?
Vanselous: Shippers will find that sustainability and 'green' initiatives are often perfectly aligned with business needs to reduce transportation spend. Using optimization technology and TMS to consolidate multiple LTL shipments to full truckload movements, select lowest-cost routing modes, and plan private fleet movements for lowest miles and reduced empty miles, results in lower carbon footprints and reduced freight costs. Surprisingly, so does better dock scheduling and faster turns loading and unloading trailers, because of reduced truck idling times. Pursuing more efficient truck transport practices should be a core component of any company's sustainability initiatives because they offer such great ROI.