Taking Data on the Road: A New Approach to the Transportation Supply Chain
Consumer behavior is complicating the transport of goods. In the past, shippers would utilize freight carriers to transport finished goods to a single store or a chain of big box locations. Consumers would then take weekly or bi-weekly trips to stock up on whatever goods they preferred.
But that long upheld process is now changing. Today, technology is shifting consumer expectations, which is therefore speeding up the process of moving goods from warehouses to homes.
One of the catalysts of this change is online retail. An entire generation of young shoppers are being trained to expect immediate availability when, where, and to the degree they need it when they order online – regardless of price or quantity. As more young people move to city centers, their homes, apartments, and condos have less storage than do suburban or rural homes. They are also less likely to own vehicles making the transport of items from the store more challenging. Ordering online solves both of those challenges, and it has become the norm. As a result, shipment and delivery traffic has increased, and will continue to do so. This makes the impact of logistics and other factors far more significant on final costs.
How can shippers navigate this complexity, retain a better understanding of their true costs, and operate more efficiently? Data is the key to telling this increasingly complex story. Everywhere you turn in your daily life data is being collected, and the transportation industry is no different.
This begs the question: once collected, what is your organization doing with valuable transportation data to improve your business? Rather than focusing on a supply-led, carrier-focused strategy, shippers should consider demand-side data and the ways it can drive a more effective strategy.
From shipping to strategy
A common mechanism shippers use to meet hastening consumer demands is the use of digital freight brokerage, which moves freight wherever it needs to go on a one-time basis. This method is convenient and can be a viable option for moving freight when of-the-moment challenges arise, but when shippers over-rely on this technology, they fail to position themselves with an efficient and enduring strategy.
When shippers focus too much on meeting operational obligations, it becomes easy to lose sight of a larger strategic vision that has major implications over time. Understanding freight flows can give shippers a more accurate picture of how their network is interacting with the market so that adaptations made today can work for them in the future.
For example, asking the question, “in which regions does other shipper freight demand run opposite to my freight?” can shed light on an important network imbalance. In an area like Florida, for instance, there are generally more incoming shipments than outgoing. This creates an opportunity to discount outgoing carriers taking trucks out of an oversupplied market.
Another example might be asking the question, “where should my company build a new distribution center?” By using data to understand freight flows, shippers can find an optimal location to build that keeps their supply and demand of freight in balance, and eliminates unnecessary miles driven outside their existing network.
Data can also provide visibility into selecting the right carrier partners on a lane-by-lane basis. While carriers may contract nationally, they often operate heavily on a region by region basis. Finding a carrier naturally operating within your network can help reduce costs and increase carrier compliance. Diving into actual freight data reveals these pattens better than just looking at whether carriers picked up freight or not. This helps shippers plan a more efficient, cost-effective, and enduring procurement strategy, rather than simply hitting the easy button for spot-market freight.
Enabling a data-driven approach with forethought to the unique aspects of a network can provide shippers with new efficiencies that saves them money while still satisfying their customers. Transportation used to simply be about execution, now it’s a competitive advantage.
About the Author
Heather Mueller makes sure Breakthrough provides an exceptional experience to current and prospective clients. Along with her deep commitment to our culture, Heather is a passionate advocate for the mission of creating transparency and fairness in the transportation and supply chain industries.