How Shippers Are Taking Control of Supply Chain Management
Analytics solutions offer visibility into past, present, and future spot and contract market rates, enabling strategic sourcing, planning, and cost management.
Q. How are shippers responding to the uncertainty and disruptions of the past few years?
A. Shippers rely on trusted partners with more expertise and resources to handle critical parts of their supply chains. While this makes sense from a cost and efficiency standpoint, dependency on partners reduces visibility and control, and even makes shippers more susceptible to external circumstances or disruptions.
For example, crisis-level capacity shortages during the 2020-22 time period revealed significant vulnerabilities in supply chains and standard practices (e.g. annual RFPs). Carrier tender acceptance rates fell from the 90% range to the low 70s despite rising costs, wreaking havoc on budgets. The typical annual procurement cycles started happening more frequently, even reducing to quarterly or monthly “mini-bids.”
As pricing power shifted in favor of shippers, many have been optimizing costs, enhancing resilience, and revamping procurement processes. Some are bringing functions in-house, while others are implementing stricter oversight of their logistics service providers (LSPs). Shippers are also increasingly relying on data and analytics tools to monitor market conditions, shipping lanes, carriers, and costs.
Q. What are the potential advantages and disadvantages of bringing operations in-house rather than relying on LSPs?
A. Shippers are outsourcing certain functions at a lower rate compared to five years ago, as indicated by DAT’s annual shipper survey. While the following categories are still typically outsourced, there has been a steady decline in the percentage of companies outsourcing these functions:
- Transportation procurement
- Transportation planning
- Transportation execution
- Carrier management
- Freight payment
- Greater visibility and control of operations help shippers proactively anticipate and solve challenges.
New technology enables fast and transparent relationships between shippers and transportation providers, facilitating stronger carrier relationships.
Relying on a single approach to truckload procurement can lead to missed opportunities, increased work, and higher costs. More shippers are adopting a combination of dedicated, contract, and spot relationships to cover loads, resulting in enhanced efficiency, productivity, and comprehensive coverage.
Q. What are the advantages of data and analytics for shippers?
A. Whether shippers bring certain functions in-house or not, data and analytics assist them in making more informed freight decisions; access to accurate and timely market intelligence through rate and network analytics is the key to success.
Analytics solutions offer visibility into past, present, and future spot and contract market rates, enabling strategic sourcing, planning, and cost management. Shippers can gain lane and carrier insights to prevent routing guide failure, secure reliable capacity, and build resilience. With these solutions, shippers can confidently make operational decisions, regardless of their approach.
DAT iQ delivers the deepest, broadest, and most accurate market data in the industry, with more than $150 billion in transaction data, supported by powerful analytics capabilities and expert guidance. To learn more, visit www.dat.com/Empower_iQ