191 qualified global logistics practitioners were surveyed in 2015 by American Shipper magazine for their seventh annual benchmark study of transportation management. The report examines the trends impacting how shippers and logistics service providers manage freight transportation processes and the technologies used in support of these processes. The 31 page report was full of valuable insights and is worth reading in its entirety. However, here is a distillation of the best practices for approaching transportation and logistics IT initiatives provided at the conclusion of the report.
American Shipper advises transportation managers to:
1) Work towards achieving visibility across all modes with an emphasis on the application of metrics to reinforce the value of visibility to all stakeholders in the organization. They recommend deriving actual dollar figures to benefits which, not only helps improve processes, but also supports greater understanding of the value driven by improved visibility, which in turn can be used to support additional investment into logistics IT solutions.
2) Focus on improving understanding of the key milestones in your transportation network and boost visibility efforts specific to those milestones. They will be the trigger points for real-time reactions/changes when disruptions occur.
3) When selecting a TMS solution, be certain you’re choosing a tool equipped to respond in real-time to demand peaks/valleys and other potential supply chain disruptions. “Optimizing for the best case scenario is only useful when the best case scenario actually happens” according to the report.
4) Pay extra attention to your network design and perhaps even employ a network design tool to govern your day-to-day transportation management activities. Periodic design exercises can be a powerful additive to regular optimization practices, helping determine the best locations for sourcing (inbound) and distribution center placement for outbound logistics.
5) Realize that a plurality of TMS users (as polled for the report) don’t necessarily view cost reduction and carrier service as the highest priorities with regard to the benefits of a TMS. Yes, cost savings is certainly valuable, but if it is the only focus of a TMS initiative, there are plenty of other opportunities/benefits a TMS can deliver which may be overlooked.
That last best practice recommendation cannot be emphasized enough. Sure, cost is a valuable metric for gauging success. However, cost savings generally tend to follow when a shipper successfully focuses on improving overall efficiency, data accuracy and service. The overall benefit of operating efficiently and making transportation decisions based on actionable data leads to service improvements, happier customers, carriers and ultimately, improved profitability and competitive advantage. The graphic below illustrates how this reality is supported among the respondents to the American Shipper survey.