Any Way the Wind Blows Doesn’t Really Matter to TMS Users

Is your company ready for accelerating growth or imminent slowdown in the summer of 2015? Do you even know which event to plan for? Would you be interested to learn about strategies for insulating your business from the effects of these capricious market conditions? Read on for some commentary on why the economic outlook is so unpredictable and what you can do to ensure profitable operations regardless of which way the economy inevitably swings.

There are some very mixed signals coming from the US economy in April of 2015; signals that are making a dicey proposition of planning for the second half of business operations for companies of all sizes. Plan for too much volume and a business will be paying for idle workers and stacking inventory. Plan for too little and risk leaving money on the table when business is outpaced by demand. Looking at the traditional indicators, the business case for flexible logistics planning tools like TMS, optimizers and fleet management tools grows even more compelling.

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The managed supply chain logistics program provides the visibility and control necessary to rise above the reactive when it comes to uncertain economic conditions. Now more than ever, it is vital to success to have a solution in place that delivers on this promise, whichever way the wind blows.
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After more than a year of positive news about economic growth – and tangible evidence of seemingly positive indicators like lower gasoline prices and strong hiring – the US economy hasn’t witnessed the expected boost. In fact the trucking industry (a bellwether for the health of the overall economic picture) has shed 6,800 jobs in March; the first decline in almost 2 years.

AP writer Josh Boak reports that overall job growth and low gas prices are not factoring into a stronger economy. Boak’s recent newswire article noted that, unlike during past economic recoveries, in 2015:

• Lower gasoline prices haven’t translated to higher consumer spending
• Falling unemployment has not led to wage hikes
• Lower mortgage rates have not spurred greater home sales

The piece then goes on to offer some possible mitigating factors that may explain why we’re yet to see the “pop” we’re expecting. Boak points to consumers’ desire to pay down old debt with the money they’re saving at the pump instead of splurging. He pegs the long and harsh winter for the weakness in new home starts and a glut of global workforce capacity for the meagerness of pay raises. Add to these factors a strong dollar depressing exports and increasing use of automation among businesses and a picture begins to emerge. The promise of a new boom may be fizzling out.

On the other hand, aging consumer debt will ultimately be paid down; Spring has sprung which should release pent up demand for new home starts and other activities; the strength of the dollar abroad makes domestic labor more competitive. These and other leading indicators still point toward a breakout.

This pivotal moment perfectly illustrates the value inherent in logistics IT solutions. The discipline and predictability TMS software brings to transportation planning provides shippers access to capacity and helps avoid costly spot market rates should a big jump in activity materialize. Should overall economic activity remain depressed, having a freight and route optimizer is critical to building the most efficient loads and routes, finding backhaul opportunities and planning continuous moves, ensuring the best results are squeezed from each and every transportation dollar. Private fleet management tools help companies reap the benefits of a right sized mix between common carriers and dedicated resources, again translating into cost savings and increased flexibility.

The managed supply chain logistics program provides the visibility and control necessary to rise above the reactive when it comes to uncertain economic conditions. Now more than ever, it is vital to success to have a solution in place that delivers on this promise, whichever way the wind blows.

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