Quantifying Transportation Performance With Technology Tools
Q: What strategic direction have shippers and carriers developed to increase partnership value?
A: Shippers and carriers have become more collaborative in their approach to pricing. For example, in the less-than-truckload market, shippers have begun to use carriers' rate base when running their bids. This creates value for shippers by using each carrier where it operates efficiently, as its rate base is naturally lower in those lanes. Because the carriers are awarded the freight they desire, shippers have a more sustainable pricing model.
Q: How do shippers leverage integrated technology and services to increase transportation performance?
A: Today, it's all about Big Data. Everywhere you look, companies are using Big Data to make decisions, whether it's hospitals trying to predict how many people will be sick this flu season, or the fashion industry mining Twitter to see how consumers are receiving the latest trend.
Many of the same concepts can be used to help shippers achieve their goals. This all starts with gathering detailed information about your transportation spend during the freight payment process, then marrying it with data from your transportation management system (TMS).
TMS data provides context that is often missing from freight payment data alone. The TMS can analyze this combined data to ensure compliance and measure success. Once these systems are all sharing information, you can run simulations against your real shipments to quantify how much the next change in your supply chain may cost, which adds one more piece of valuable data to your decision-making process.
Q: What analytics and compliance metrics are most beneficial for shippers to quantify performance?
A: Shippers should monitor two key performance indicators (KPIs). First, the Savings KPI shows the savings achieved since making the last change to their supply chain. Second, the Lost Savings KPI shows their users' compliance with the program and strategy in place.
The goal is to move as much money as possible from the Lost Savings KPI to the Savings KPI. With the detail of each shipment available through the drilldowns of these KPIs, shippers can quickly and easily see what scenarios are causing users to fail to adhere to the program.