Cutting Transportation Costs
Transportation market volatility stems from an inevitable pendulum swing between a buyer's and a seller's market. Here are some innovative ways to reduce transport costs.
1. Digitize inbound and outbound logistics processes. Automating manual processes reduces costs by streamlining operations, allowing for better management and improved efficiencies such as quicker order processing. Streamlining operations saves your team time, freeing them to focus on other tasks.
2. Understand accessorial charges. Accessorial charges for additional services beyond normal pickup and delivery often come about because of poor communication or inaccurate documentation. Knowing what makes carriers happy, such as shorter wait times, can help to eliminate these charges.
3. Become a shipper of choice. Today, carriers can be selective about who they want to work with. Making it easy to do business with your company will improve your carrier relationships and help you get preferential rates.
4. Eliminate operational silos. Connecting transportation operations with procurement, ERP, and other systems brings down barriers between departments and improves communication and collaboration. Completely digitize your shipment process by integrating with your ERP system to eliminate double data entry, which cuts admin time and speeds shipment scheduling.
5. Use analytics to improve operations continually. Reviewing historical records and analyzing trends can help uncover bottlenecks that can slow processes and add costs. For example, you may discover that one carrier consistently adds accessorial charges while another, equally compatible carrier does not.
6. Use a Digital Supply Network. Connect to your carriers, suppliers, and trading partners over a digital network, allowing your business to foster collaboration for sharing or consolidating loads. The fuller the truck, the better the transportation spend.
7. Gain network visibility. Connecting to all trading partners allows your business to gain visibility into what is happening on the network so you can respond to alerts proactively. Visibility enables optimization within the organization to reduce errors and shipment lead times.
8. Tap into new data sources. Smart devices offer the potential for acquiring a massive volume of relevant data about your supply chain. The tricky part is figuring out how to link this stream of information about transportation assets, weather, or product containers to the relevant supply chain transactions. Only then can this data elevate to information that improves your visibility solutions and the value they provide.
9. Share sales forecasts. By sharing forecasts, your carrier can be alerted when trucks are needed, helping you avoid the high cost of courier or overnight services to meet customer schedules.
10. Go out to bid more often. To offset tight capacity and rising shipping costs, shippers should go out to bid for new transportation contracts more than annually to find the best rates and avoid potential disruptions from transportation shortages.
SOURCE: Cindi Hane, Vice President, Product Management, Elemica