A PUBLICATION OF CERASIS
HOW TO SHIFT FROM TACTICAL TO STRATEGIC LOGISTICS & TRANSPORTATION MANAGEMENT TO CREATE A COMPETITIVE ADVANTAGE
TABLE OF CONTENTS
1
2
3
4
5
Introduction
10 Ways Effective Transportation Management
Drives Competitive Advantage
8 Steps to Controlling Inventory Flow &
Driving Warehouse Efficiency
6 Strategic and Proactive Tips to Stay Ahead of
Distressed Shipments
5 Areas of Technology Application to Aid in
Logistics Visibility and Communication
6 Benefits of Applying Useable Data in
Logistics For Continuous Improvement
Strategic Logistics Management: The
Importance of Flexibility6
TABLE OF CONTENTS
8
9
10
11
Why A Successful Transportation Management
Program Is Empowered By Data
How Effective Logistics & Transportation
Management Leads to Scalability
5 Benefits from Logistics Sustainability &
Efficiency
5 Engagement Strategies in Managing a
Relationship With a 3PL
5 Change Management Tips to Create a
Strategic Transportation Management Mindset
Conclusion
7
Strategic Transportation & Logistics Management
Transportation management is no longer a tactical approach to simply moving freight
and doing it at the lowest possible cost. There are several factors that exist today that
are forcing shippers to use even more resources, which distract from their core
competencies, in order to have a strategic and much more nuanced, complex
transportation management practice. Those savvy shippers who either find those
resources internally or are doing what a lot of shippers are now doing, outsourcing to
a transportation management service provider, are using a more strategic and effective
transportation management approach as a competitive advantage tool, in the ever-
challenging economic and commercial landscape.
As we head towards what many experts are citing as a 2017 carrier capacity crisis and
growing demands from consumers to keep them happy call for shorter delivery cycles,
the traditional strategy of procurement cost saving and shipment consolidation
opportunities have to be supplemented through innovative solutions, to deliver the
best bang for the buck.
This is especially relevant for third-party logistics and transportation management
service providers, whose service fee is based on reducing cost and streamlining the
shipper’s supply chain. For those looking to get more effective transportation
management.
Join us in this comprehensive e-book as we look at the following 10 ways effective
transportation & logistics management drives a competitive advantage for shippers.
INTRODUCTION
10 Ways Effective Transportation Management
Drives Competitive Advantage
We will explore in this e-book 10 areas of focus that shippers can employ in their own
transportation and logistics management practices themselves or with the aid of a
third party logistics provider in order to create a strategic approach to shipping and
other logistics functions. Below, you will see these 10 core areas with a brief
introduction to each. In subsequent chapters we will then expand upon each at length
to offer practical tips that any shipper can begin to use in their own business.
A strategic or proactive approach to transportation and logistics management allows a
shipper to create a competitive advantage as the paradigm and practical shift to
strategic away from tactical lends more time and resources for a shipper to focus on
their own core practice. A manufacturer or distributor, is not in the business of
transportation management, so any way to get more value out of these two business
functions provides a competitive advantage over competitors who are not as efficient
and strategic with transportation and logistics management.
1. Controlling Inventory Flow & Driving Warehouse Efficiency
Effective transportation & logistics management strategy takes into account the
availability of materials and order fulfillment requirements, ensuring that those
resources are optimally utilized and warehouse capacity. Attempting to "normalize”
flow through a distribution center or inbound to manufacturing is a critical aspect to
controlling overall logistics and transportation costs. Additionally, some level of
predictability helps in the carrier sourcing aspect of the business too.
2. Gaining "Shipper of Choice" Status
With mindfulness towards a strategy in effective transportation management that
drive capacity commitments with a myriad of select carrier partners per lane, easy pay
terms and rewarding performance, shippers are making it easier for carriers to do
business with them. Gaining "Shipper of Choice" status empowers the shipper to
gain an awareness and understanding which in turn aids your partner carriers in tight
capacity marketing. Working with carriers and all the freight you manage to create
continuous movement strategies is a win-win approach.
3. Using Technology to Provide Visibility to Shipments and Communicating
en Route Disruptions
The ability to proactively identify service disruptions is critical in today's fast-moving
communication world. One of the most overlooked success factors to shipment
tracking is simply defining what the expectation is between your own company, the
receiver of the goods, a 3PL, and your carrier partners. Too often the 3PL and
shipper are not aligned on the expectation of shipment tracking. Does the 3PL have
technology for effective transportation management allowing for the ease of
communication? Additionally having a robust process, and authority to act when
shipments do not go as planned, is important to effectively manage distressed
shipments.
4. And Understanding & Visibility into the Data in Transportation for
Continuous Improvement
Continuous improvement in effective transportation management is now often
realized by strategic shippers thanks to the increased use of technology and integrated
systems providing the ability to data mine transportation reports for substantive
business intelligence. This large movement towards more use of the data to glean
insights created by processes within technology is known as "Big Data." The ability to
analyze the freight spend down to a single customer, at an order or even at a product
level, can be a key input to developing competitive product pricing and identifying
opportunities for change.
5. Improved Flexibility Creates Higher Customer Satisfaction & Ability to
Service Different Size Orders
Highly sophisticated order optimization capabilities is a direct result of effective
transportation management. This increased flexibility from not having to get down in
the weeds of process allows a shipper to not compromise delivery requirements and
freight spend budget. Technology and historical analysis of transportation data allows
load planners to determine the optimal modes of transportation as well as the
preferred carriers who are consistently performing.
6. Creating an Effective Transportation Management Program Run by Metrics
Speaking of metrics.....Utilizing the right metrics to monitor the health of your
transportation footprint and network are critical. Transportation management systems
provide a wealth of information, but it can be overwhelming finding the right metrics
to manage your business. Identification of key process indicators will help focus your
search for the right data. It’s also important to have flexibility in generating metrics.
As your business changes, so will your metrics requirements. Having the ability to
transform data into usable knowledge is the goal.
7. Allows for Scalable Business Operations Across all Departments
As your organization expands through growth and acquisitions will your
transportation management strategy and technology meet the increased demand and
complexity? Having a scalable solution is critical to meeting today’s rapidly changing
business environment. Integrating all your separate supply chain systems together will
allow you to manage your business through a single lens. Additionally, when you have
more access to your transportation spend due to housing all of your supply chain data
within technology, the leaders of the business can better understand how
transportation affects other parts of the business such as customer service, marketing,
and sales.
8. Sustainability to Lower Carbon Footprint and Increase Customer Affinity to
Your Brand
A smaller carbon footprint can be had in nearly any operation via consistently and
continuously seeking shipment planning options, consolidation opportunities and
mode shift capabilities. As we said in our post, "Attracting Millennials to
Manufacturing: Understanding Millennial Experience in Order to Gain Talent &
Customers," millennials care a lot about the future of the environment. Those
shippers who build an effective transportation management strategy to include
sustainability initiatives, will beat out the competition who does not.
9. Properly Engaging & Managing a Relationship with an Effective
Transportation Management 3PL
When selecting a 3PL to aid you in a robust and effective transportation management
strategy, defining the rules of engagement is critical to success. Do you even first
understand your own needs? We've built a deep checklist to understand first before
you go about engaging with a 3PL. When you do engage and hire a 3PL for effective
transportation management, it is vital that you look at this relationship as a
partnership and not a commodity. Empowering people to make decisions and holding
them accountable for the outcome is a foundational aspect for any program.
Understanding the client’s business environment and aligning the right resources to
the program is a must and an onus on the 3PL you hire. There may be occasions
when the relationship is challenged. Having a strong relationship and project
sponsorship on both sides will ensure a successful outcome.
10. Pivoting to a Strategic Look at Transportation Management Requires
Change Management
Does your company embrace or challenge change? Having the mindset to accept
changes is critical for any 3PL to deliver value. Engaging with a 3PL or TMS software
and asking them to do what we do today and expecting a different outcome will lead
to disappointment. Being able to accept change is critical for the success of any
program.
If you are a shipper who seems to always feel in the weeds of tactics, most likely you
are not eliminating all the wastes, such as unnecessary costs or time used to manage
transportation, that you could be by looking at an effective transportation
management strategy driven even further by the use of a 3PL.
8 Steps To Controlling Inventory Flow & Driving
Warehouse Efficiency
“Victorious warriors win first and then go to war, while defeated warriors go to war
first and then seek to win.”
― Sun Tzu
“The essence of strategy is choosing what not to do. ”
― Michael E. Porter
"However beautiful the strategy, you should occasionally look at the results."
― Winston Churchill
"The best CEOs I know are teachers, and at the core of what they teach is strategy."
― Michael Porter
"The aim of marketing is to know and understand the customer so well the product
or service fits him and sells itself."
― Peter Drucker
"The purpose of a business is to create a customer."
― Peter Drucker
"Sound strategy starts with having the right goal."
― Michael Porter
Staying Strategic in the Warehouse with Better Inventory Flow
Throughout the entire order fulfillment process, companies have a duty to ensure
optimum warehouse efficiency by appropriately controlling inventory flow. Warehouse
management rests at the heart of an effective transportation management strategy,
and an inefficient, error-laden system results in poor shipping procedures, poor
customer satisfaction, and deviations from best practices.
Companies must also consider the potential impact of returns and warehouse
capacity. An overstocked warehouse leads to misplaced product in unusual slots and
lost costs. Similarly, an understocked warehouse results in delayed shipments, irate
customers, and poor company performance.
Every time an item moves in the warehouse, the opportunity for errors exist.
Unfortunately, this includes all possible processes, data collection points, and inbound
to manufacturing areas. Fortunately, a dedicated transportation management system
(TMS) in combination with a warehouse management system (WMS) can reduce, if
not eliminate, these errors. Warehouses should also consider implementing these best
practices to ensure effective warehouse management and maintain control and flow
of inventory.
Automated Data Collection
Some companies believe in the power of a pen and paper in tracking inventory
movements. However, the sheer volume of today’s processes in warehouse
management have made hand-written tracking procedures obsolescent. The same
problem exists with manual entry of information into computers and electronic
shipping systems. Although such methods still exist, they can easily misread,
misunderstood, or entered incorrectly. As a result, subsequent shipping processes for
a specific order become disorganized and inaccurate.
Modern warehouse management demands bar codes or radio frequency identification
(RFID) to automatically track and collect data about an item. This eliminates the
potential for human errors in transcribing information manually.
When automated data collection emerged, the cost of implementing such technology
exceeded the possible losses from human errors. However, automated data collection has
become more affordable and cost-effective in the global economy. Automation carries a
significant return on investment when a warehouse makes the transition. Initial change
will be hard for the warehouse, but it will cut costs and improve overall performance of
the facility.
Transaction-Based Movements Inventory Flow
Every movement throughout a warehouse represents a chance to lose track of inventory,
cause an error in the order, or result in additional picking errors. Every movement from
arrival to slot-placement to picking to wrapping should generate a transaction.
Transactions are commonly misunderstood to reflect the sale of merchandise. However,
transactions within a warehouse allow for the tracking of a product’s movements and
status in the order fulfillment process.
Dock Arrival Times
All merchandise should arrive on the dock at the same time when the truck arrives. This
reduces wasted space by sitting product. Furthermore, differing types of shipments, such
as full pallets, cases, and individual item shipments, should be sent to the dock
simultaneously.
Picking Procedures
Managing a warehouse to better inventory flow requires predictions and managing orders
that have yet to arrive. Pickers, which may be human or robotic, should plan for the next
wave of picking. If an upcoming wave will result in picking shortages in one portion of
the warehouse, pickers should be diverted from lower-priority picking duties to the surge-
area. This will help maintain pickup times and ensure all shipments leave the warehouse at
the correct time.
System-Directed Replenishment
As orders move through order fulfillment and picking, the slots will gradually empty.
When a given slot falls below standard levels, the WMS should generate an order to
the manufacturer. However, this generated order should consider whether a given
product will be in high-demand in the coming weeks. This will help account for
inventory flow fluctuations and customer-demands decrease and increase throughout
the year. The WMS should be designed to generate a reorder of product before the
product reaches minimal levels.
Vendor Compliance Programs
While an ideal warehouse would focus on incoming product from one vendor,
modern trade involves hundreds, if thousands, of potential vendors. A vendor
compliance program allows warehouse managers to ensure all inventory is brought to
the facility at the correct time, in the right quantity, and packaged appropriately.
Therefore, communication between the vendor and facility, a vital part of advance
notification, plays a strong role in ensuring accurate inventory flow and improving
efficiency in the warehouse.
For example, a warehouse may hire a vendor compliance manager to ensure all
vendors meet the facility’s requirements. Furthermore, this manager would
responsible for determining the percentage of vendors who comply with such
requirements and suggest improvements to poor-performing vendors.
Returns Management
Returns are an inevitable part of any warehouse management strategy, regardless of
efficiency and the implementation of best practices. Customers may decide to return
an item due to buyer’s remorse. However, the distribution center (DC) or warehouse
sees this as an additional cost.
To maintain efficiency and accurate inventory control, all returns need to be carefully
scrutinized for resale value, needed repairs, or return to the manufacturer. As a result,
a WMS must account for returns that will be able to be restocked in the appropriate
slot.
Flexibility and Evaluation
Errors will happen in warehouse management, and the warehouse team needs to be
ready to adapt to changes in processes. This flexibility allows a warehouse to meet
changing demands of vendors and customers, which drive all shipping processes. If a
problem recurs, the warehouse processes should be re-evaluated to determine if a
change in procedure will correct future problems. Maintaining flexibility is critical to
meeting demands in the global market.
Making a warehouse improve efficiency and maintain control of inventory flow
sounds simple. However, improving warehouse inventory management reflects
thousands of individual processes, and every attempt to curtail problems should be
considered, implemented, and adjusted throughout the shipping process. By following
these eight steps, a warehouse can improve their efficiency and gain more control over
their inventory. Inventory Flow Optimization is a vital part of the supply chain, and if
not maintained, then transportation is adversely affected. The best-laid transportation
management strategies are completely undone with improper inventory management.
Only as strong as your weakest link, as they say!
6 Areas Of Staying Strategic And Proactive
With Distressed Shipments
Opportunities for errors abound throughout shipping processes. Sometimes, these
errors lead to the failure to deliver a product on schedule, if the delivery even makes it
to the recipient at all. When a shipment fails to meet the expectations for delivery, the
shipment is considered to be distressed.
Distressed shipments account for the majority of insurance claims, returns of
merchandise, and poor customer feedback among shipping entities. However,
employing certain best practices for addressing distressed shipments can minimize
their impact on consumers. As a result, the customer-company interaction remains
positive, and the shipping company does not face the added criticism of failure to
provide accurate service. Let’s take a look at the six best practices for managing
distressed shipments.
Managing Driver Responsibilities
Drivers are the most influential factor in delivering a product in a timely manner. If a
driver fails to meet standards, such as failure to pass state-mandated inspections or
being prevented from leaving the loading dock on time, the expected time of delivery
is pushed back. Shippers can address this problem by effectively managing driver
responsibilities.
For example, the use of automatic logging systems and accountability tracking
software can reduce the opportunities for driver problems. Furthermore, these
systems allow drivers to focus on getting product from warehouse to the consumer.
Another example could be the use of sealed loads prior to departure from a given
distribution center or warehouse. Drivers should not sign off on a shippers load and
count (SLC) form unless the load is actually sealed. This will prevent shipping errors,
such as picking up an incomplete load.
Route Management
Distressed shipments often occur due to poor weather or inaccurate route
management. A shipper must ensure drivers have an up-to-date list of route
directions to ensure appropriate, timely deliveries. Furthermore, shippers should avoid
the temptation to require drivers to maintain a given route if another faster route can
be identified. However, secondary routes should not pose a threat to the freight, i.e.
the secondary should not cross state-lines if the initial route would have retained in-
state transport.
Real-Time KPIs
Throughout shipment procedures, shippers need to know where their shipments are
located, their current status of delivery, and how much time is currently required to
get the shipment to the destination. This is achieved through the use of real-time key
performance indicators (KPIs).
KPIs may include radio-frequency identification (RFID) chips, GPS-enabled tracking
systems, and real-time alerts to possible problems. For example, a tire blowout should
trigger an automatic notification to the shipper’s transportation management system.
If the estimated repair time is longer than the estimated time to get another driver to
the incident’s location, the shipper should consider deploying a second driver to pick
up the shipment. Although this represents an added cost to the company, it will
reduce the probability of dramatic impact and evolvement into a distressed shipment.
At Cerasis, we have recently implemented real time tracking using the driver's smart
phone application. The notification is sent right to our TMS or freight brokerage team
so we may easily give our shippers a heads up of any distressed shipments.
Use a Web-Based Transportation Management System
Some shippers may opt to use terminal-based transportation management systems
(TMS). A TMS monitors all current shipping activity in terms of docking and loading
times, departure status, distance to destination, and driver information. Unfortunately,
terminal-based TMS systems have the drawback of not being able to account for
multiple errors and events immediately.
When terminal-based systems are used, the chances of missing an update due to
location issues becomes more prevalent. Alternatively, web-based TMS allows the
shipper to access information from a given server on any shipment’s status information
at any location with Internet access. This is vital to ensuring accurate, up-to-date
information about a distressed shipment.
Delivery For Non-Available Deliveries
Modern delivery schedules rarely fall into perfect alignment with delivery recipients’
schedules. In many cases, this results in lost time during attempts to deliver a product
to an undeliverable (not at location) recipient. Traditionally, this would immediately
result in a distressed shipment; however, the issue can be addressed by improving
communication between drivers and delivery recipients.
For example, the driver’s phone could send an automated message or call to the
recipient to determine if the recipient will be available for delivery at the time of
leaving a current delivery. If the communication results in a determination of a non-
available recipient, the driver can make the decision to move forward to another
delivery recipient in the route. On the other hand, the driver could use a lock-box, such
as those offered by many postal services, to deliver the product on-time and advise the
delivery recipient of the appropriate action to get their product.
Effective, Efficient Claims Process
Regardless of the strategies used to prevent distressed shipments from growing in
severity, some distressed shipments will result in lost merchandise or revenue. In cases
where an item was incorrectly delivered or not delivered at all, the shipper needs to
have a specific, easy-to-understand claims process in place. This will make any possible
insurance freight claims efficient and reduce the impact on future business dealings
with a given recipient.
Similarly, some distressed shipments may result in a recipient canceling their order. If
such action occurs, the shipper must be prepared to accept responsibility for the delay
and its associated costs in transport. Some shippers may have specific rules for
restocking fees and return-to-sender shipments; however, these policies should not be
geared towards punishing the consumer if the shipping delay was the fault of the
shipper.
While a distressed shipment-free world in shipping would be ideal, human factors will
never allow this to be a possibility. However, improving technology and accountability
throughout the shipping process through the use of these seven tips can reduce the
number of distressed shipments and how distressed shipments impact a company’s
profit margins. Until shipping becomes solely dependent on robotics, including
robotically-controlled transport vehicles, shippers will need to educate their staff and
personnel on these tactics.
5 Areas of Technology Application to Aid in
Logistics Visibility and Communication
As society grows more dependent on information exchange between companies and
customers, the issue of supply chain and logistics visibility becomes prominent for
companies. Modern shipping companies have cited visibility as one of their top
priorities for optimizing the supply chain. However, visibility is commonly
misconstrued as simply order tracking. However, logistics visibility actually can be
used to provide insight into daily shipping processes, adjust shipping practices to
account for changes in demands, and build stronger customer service relationships.
Take a look at some of the best practices for using technology to provide better
logistics visibility into shipments and monitor en route disruptions.
Consider Differing Fulfillment Models
Modern trade often crosses international boundaries, and trade across borders may
require upwards of 20 handoffs to get the destination successfully. However, some
products as part of a single shipment may also be coming from domestic locations.
To successfully monitor these processes, visibility tools should take international
versus domestic time requirements into consideration. Furthermore, this will help
reduce delays from issues in one type of fulfillment model.
For example, trade from a single port may become congested. If the logistics visibility
tools identify this congestion, incoming shipments can be diverted to a less-congested
port. As a result, disruptions and distressed shipments are lessened.
Assess Data Quality
Although data can be collected automatically across all shipment processes, the quality
of data greatly affects its ability to enact change across supply chain practices.
Unfortunately, part of the problem with using incorrect data lies with the assumption
of all data being of high quality. Warehouse managers should thoroughly screen and
assess the quality of data. However, the amount of data makes this aspect of data
collection and screening impractical for manual analysis.
An automated transportation management system (TMS) can effectively screen and
manage incoming data. Data which points to inefficiencies and potential disruptions
can be quickly located, flagged for input from a manager, and used to change the
supply chain practices. For example, data about weather delays could trigger the
shipment of the same item from an alternate location where the delay in shipping the
order would be less than the time required to get the original order from the area with
unfortunate weather to the destination.
Furthermore, customers will see what problems cause delays in their shipments. As a
result, customers will be less likely to contact the company about the order. However,
the potential to cancel an order for a delay always exists. This brings us to the next
point, enhancing logistics visibility back to the point of origin.
Point of Origin to Delivery Tracking
For international shipments, the point of origin of shipment comes under the scrutiny
of the US Customs and Border Protection (CBP). Failure to provide accurate point of
origin information about a shipment will result in delays, penalties, and possible denial
of entry to the US for international shipments. This represents a major disruption in
the flow of shipments across the supply chain. However, automated tracking and
logistics visibility from the point of origin eliminates this concern. As a result, imports
will suffer fewer setbacks and deliveries will be less likely to depart from the original,
estimated date of delivery.
Many different forms of automated tracking exist, such as RFIDs and bar codes.
Furthermore, robotic picking and shipping machines eliminate the human element in
processing an order. These automated processes can also be used to print and apply
shipping labels, which further reduces costs and possible delays in the shipment and
delivery of an item. Moreover, automated tracking helps ensure compliance measures
are met as required by the CBP. For example, import and export records can be
immediately accessed upon request or on a recurring basis to be sent to the appropriate
official at the CBP.
Gather Information in a Central Location
Although various methods and technologies exist for the tracking of shipments, the
information lacks value if not kept in a central location. The central location of data or
information hub provides companies with the opportunity to use correlations between
existing problems or delays to reduce future delays. Furthermore, the collection of this
data can be analyzed to determine how to best address a given problem.
For example, an information hub may contain data from ERPs, the TMS, and the
WMS. Ultimately, the information hub provides insight into all of the possible factors,
which may be affecting a given shipment. If shipment A has suffered a setback due to
a warehouse emergency, nearby personnel and drivers can be diverted to assist with
returning the warehouse to maximum efficiency. As a result, the shipments from that
specific warehouse can be returned to on-track status, which reduces distressed
shipments.
Online Shipment Tracking and Customer Service Relationships
Many modern retailers offer shipping status tracking services within their websites,
which helps drive traffic to the retailer’s site and improve customer service
relationships. However, online shipment tracking relies on information from the
respective shipper to ensure all information is up-to-date and reflects the accurate
location and status of the shipment.
To take advantage of this trend towards retailer-website tracking capabilities, the supply
chain must be willing to share data about a given shipment. Essentially, the entire
premise of logistics visibility rests on the concept of sharing information about a given
shipment. However, the sharing of data in this respect helps to build strong customer
service relationships, which enhance a business’s reputation and drive the supply chain
forward.
Visibility in the supply chain is the top priority for all involved in supply chain
processes. Visibility helps reduce costs across the supply chain by maintaining
communication between customers and businesses. Furthermore, visibility helps
reduce costs from penalties and delays when shipments become disrupted en route.
Ultimately, visibility in the supply chain is a tactic to save money and improve supply
chain efficiency by making an entire organization, not individual processes, accountable
for possible delays. As a result, customers will have a higher degree of satisfaction with
the service.
6 Benefits of Applying Useable Data in
Logistics For Continuous Improvement
Shipping processes revolve around a million-trucks-worth of data. Overused and
misunderstood in blog posts and informative articles, “big data” describes the use of
data to improve your operation, which includes shipping, warehousing, and supply
chain processes. However, the concept of data gets blown out of proportion when its
core functions can be broken down into simple, easy-to-implement procedures. Take
a look at how your data can be used for continuous improvement across your
organization.
Performance Management
Think about how your operation functions. Do all of your team members understand
and fulfill their duties appropriately? Are pallets and shipments picked on time and
without errors? Will an inaccurate picking result in one error for the original problem
or two errors for sending an incorrect product and retaining the original, correct
product in your inventory? Each of these situations represents an opportunity to use
data in logistics to improve your processes through performance management.
Performance management is basically how an organization manages potential
problems and maintains standards within the workforce. For example, drivers are
expected to arrive on time, maintain docking schedules, and avoid dead time. In each
of these situations, scorecards can be automatically filled out to reflect the problems
for specific employees or groups of employees on a given dock. This information can
then be used to determine disciplinary action or require additional in-service
requirements for such employees.
Furthermore, such methodology can be applied to vendor relationships. If a vendor
fails to deliver product as specified, the vendor may be advised of how future
violations will affect contractual obligations. However, you must exercise caution to
make sure you do not damage your vendor-shipper relationship. If a vendor
consistently appears to run behind schedule, you could change your delivery schedule
to reflect the times when the vendor is most likely to arrive as determined by previous
action.
Order Processing Capabilities
Using data in logistics to improve your processes does not necessarily require existing
orders and information from KPIs and metrics. Having accurate, efficient data
integration into your processes frees up additional space for the entry of new orders.
Ultimately, this leads to more orders shipped, which further drives demand for your
services within the supply chain. As a result, your business improves, and the amount
of data in logistics grows to reveal problems within your existing processes.
Increased Visibility
Since modern commerce demands exceptional scrutiny and visibility, data in logistics
can be used to pass information along to customers. This includes online shipment
status options and notifications for customers when shipments become distressed.
Furthermore, the same data can be used to identify other routes and solutions to avoid
causing an additional distressed shipment.
If your existing shipping processes involve international trade, increased visibility may
also be a concern for avoiding penalties, fees, and delays for violations of compliance
regulations. Having this data in logistics readily available can help clear up any potential
problems at the point of entry or port, which helps promote timely and less expensive
shipments across international borders.
Generating Accurate Forecasts
Using data in logistics to generate an accurate forecast of shipping processes sounds
complex. However, it’s only the application of historical data about given time frames
to determine your needs for a given event. For example, holiday forecasts in shipping
are often used to add more workers to loading docks, shipping centers, and
warehouses. Having more employees in place will alleviate the congestion from high-
volume times, which is the overall goal of data applications.
Metrics and KPIs
Monitoring shipping processes for inefficiencies rests at the core of data collection and
analysis. However, data in logistics can be further simplified by organizing it into KPIs
and metrics.
Metrics and KPIs should reflect real-time information about your shipping processes.
For example, a loading dock is behind on schedule, a driver has not yet arrived, or a
shipment lacks item A. Each of these bits of information can be used to change your
processes to address the problem. Basically, metrics and KPIs are a means of
preventing and addressing distressed shipments.
Metrics and KPIs may also be applied to performance management concepts to
maintain efficiency within your workforce. For example, errors in picking rates and
delays in picking procedures may warrant additional training of your employees.
Metrics and KPIs give insight into how your operations exist on an on-going basis,
which allows you to make immediate decisions to improve efficiency and workflow.
Cleaning Data in Logistics
Every transaction, scan, arrival, departure, and order processing method in shipping
generates data. However, some of this data in logistics lacks value in the overall view
of your transportation processes. Your company is probably collecting data on when
employees clock in, move between warehouse zones, and arrive to the dock.
Unfortunately, this data does not necessarily provide insight into how to change your
operation unless it has been cleaned.
Cleaned data refers to data that has been processed by a computer to eliminate
erroneous material. This helps you make decisions that will affect your current
processes without risking a negative change in other processes.
For example, uncleaned data may reflect a problem with warehouse zone A picking
times. You would be inclined to send additional workers to help with the problem.
However, cleaned data will show the problem occurred at a given time, how it was or is
currently being resolved, and what type of action will best benefit the situation. If the
data were uncleaned, you may have made a decision on the basis of outdated, albeit
only a few minutes of old information, data.
The application of data in logistics, transportation, and warehouse management does
not have to be complex. Instead, data can be applied to current, ongoing procedures
and processes to improve your efficiency and accuracy in your shipping tactics.
Furthermore, data provides real-time insight into how to change and address current
concerns and problems before they evolve into serious issues for your company.
Ultimately, you must accept data’s benefits as well as its flaws when uncleaned. Think
of data in logistics for improving transportation as your personal assistant in making
business decisions. Data can help you improve your transportation processes when
applied correctly.
Strategic Logistics Management: The
Importance of Flexibility
Flexibility within logistics management is crucial to maintaining efficiency and
accuracy in shipping processes. Flexibility is often misunderstood as more companies
move towards software-as-a-service (SaaS) models for transportation management
systems (TMS). However, flexibility refers to the scalability and adaptability within a
given system to improve the effectiveness of shipping processes. Take a look at the
importance of flexibility in a TMS and how it helps to drive improvement for
shippers through strategic logistics management.
Catalysts For Increased Flexibility
Scalability and demand from customers and suppliers have given rise to a new
demand for flexibility. In a sense, flexibility makes a TMS more flexible to change. As
a result, a flexible TMS allows a shipper to view potential influences in a shipment,
make adjustments as necessary, and maintain more communication between parties in
the shipping process.
Additionally, compliance and visibility concerns are driving the demand for flexibility.
Flexibility allows an organization to ensure compliance statutes are met. If a violation
occurs, a flexible system can identify how the violation occurred, what actions need to
be taken to resolve the issue, and how such issues can be prevented in the future.
Furthermore, a flexible system helps to increase control over incoming and outbound
shipments, which further drives shipping.
A final reason for increasing flexibility includes the unpredictability in shipping. Within
hours, the supply and demand for a given product may change drastically, and shippers
need to be able to meet these fluctuations. However, meeting such fluctuations means
keeping too much inventory on-site, which results in inefficient use of space. A flexible
TMS should consider historic data for time periods and changes in transportation
methods and devise a solution to address each problem. Once these solutions have been
proposed, a transportation manager can make a decision on which solution will be the
best way to approach a given problem. As a result, the overall scope of a shipper’s
processes will improve to meet the uncertainties of future shipping issues when
technology enables flexibility and yields strategic logistics management.
Core Components of Flexibility
Flexible and strategic logistics management includes three key means of improvements:
delivery models, functionality, and services.
Delivery models are primarily comprised of SaaS subscriptions, which can be expanded
or retracted to meet the company demands. Furthermore, SaaS TMS allows an
organization to reduce costs by identifying correlations between KPIs and similar data,
which results in more efficient processes and accountability throughout the process.
The functionality of flexibility is achieved by instilling best practices, such as those used
when a shipment becomes distressed, to enact change across a shipper’s business
processes. These tools should have the ability to change to meet the demands of the
shipper. For example, the TMS may gather data about a distressed shipment, advise other
shippers of the error, and devise a solution to prevent future problems.
Combining these factors into different services makes up the last part of a flexible
system. A given TMS should be able to perform benchmarking analyses, assess
transportation procurement, and change the overall program to enhance outcomes.
Traditional Flexibility Versus Modern Flexibility
Traditional flexibility meant adjusting delivery schedules to meet the expectations of
when drivers and shipments would arrive and be ready for processing. Modern flexibility
involves the use of data analytics to discern where problems arise and how such problems
can be addressed. Basically, this involves the eradication of data that does not benefit the
shipper, providing accurate logs of information to all parties in the shipping process, and
verifying all shipped materials are included in the shipment.
Furthermore, modern shipping includes the “break-apart” aspects of traditional
flexibility models. For example, shipping several smaller items via smaller trucks may be
more effective than shipping a single load across a given mode of transport. This move
away from tactical logistics management to strategic logistics management ultimately
achieves the goal of reducing waste, that is, reducing unnecessary cost.
Role of a Routing Guide in Today’s Strategic Logistics Management Powered
by TMS
Some shippers may feel a routing guide lacks a place in modern shipping practices.
However, the routing guide is actually all of the instructional materials, which are
typically built into a given TMS. The routing guide accounts for possible variables and
factors in transportation and advises individuals on how certain solutions will affect the
outcome of a given shipment. A flexible TMS must take an individual organization’s
goals and values into consideration in the creation of a digital routing guide.
The routing guide should not act as a single, unchanging resource for drivers,
distribution centers, and others in the shipping process. Instead, the routing guide must
grow to meet the changes and demands of customers and suppliers. If a given
shipment becomes distressed, the routing guide should identify the best way to access
the materials in the shipment. This is the integral concept and makes up a significant
part of an effective strategic logistics management program. The purpose is to get
products to destinations quickly and efficiently.
Adapting to change is part of human nature, and adaptability spans human civilization
and transportation processes. As a result, flexibility is an inherent aspect of all efficient
transportation processes. Since future needs in shipping are difficult to identify, without
considering data from previous events, a given TMS should be able to adjust to meet
different scenarios and demands. Ultimately, the use of data in a TMS is the driving
force behind improving flexibility and efficiency within a shipper’s processes ensuring
that strategic logistics management is an easier pursuit.
Why A Successful Transportation
Management Program Is Empowered By Data
Business practices have become synonymous with the application and collection of
data for continuous improvement. However, most of today’s data goes unused and
represents a lost opportunity to the company. Unfortunately, data lacks value if not
properly cleansed, transformed, and applied. Furthermore, some data may be of
minimal use without comparison to and identification of trends and collaborations
between data from other transactions within a given warehouse or transportation
system.
To survive in an increasingly complex, data-driven world, businesses must be ready to
implement new “Big Data” solutions to ensure all data is aggregated, analyzed, and
stored appropriately. Businesses are often left with questions about the origination of
such data. Take a look at how a business can use technology, metrics, and services to
improve transportation processes, which range from supplier shipping to route
optimization.
Origination of Data
Data originates from one of two primary sources: individual sensors gathering data or
manual entry of data. Both entries of data represent critical opportunities for errors,
especially when considering the human element of manual data entry. In automated
data gathering, which is driven by the Internet of Things through radio frequency
identification chips or other automated data capture, data is aggregated from
thousands of sources. However, this data is nothing more than a conglomeration of
information without a purpose. It’s up to the use of metrics and algorithms to begin
the process of breaking down the data for use in being able to improve your
transportation management program.
Manual entry of data carries an inherent risk of incorrect data transcription.
Unfortunately, the error may not be the result of the technician. If the data was passed
along incorrectly, or if data did not have any value in the company, the data entry
becomes useless. As a result, uncleansed, worthless data begins to take space within the
system, which could negatively impact the overall operation. For any instances of
manual data entry, the data should be double-checked for accuracy and importance. In
today’s data-driven transportation systems, data entry should primarily be an automated
process. However, exceptions to the rule of automated data entry will always exist.
This is where metrics becomes necessary for the analysis and monitoring of data.
Metrics
In a sense, parameters may reflect the individual data capture points. However, metrics
may also be applied to the algorithmic analysis of data to identify what data needs to
be removed, clarified, or analyzed in further detail. Additionally, metrics reflects
decision capability by real-time data information.
An Example of Data Collection and Metrics in Logistics and Transportation
Management Program Processes
For example, incoming deliveries may be delayed due to inclement weather. Data
originates from within the truck’s GPS to relay information about the delay to the
corresponding destination. The warehouse or distribution center may then alter
services to reflect the change in loading or unloading schedules. This data is then
stored in a specified location to begin the analytics’ process. Afterward, the data may
reveal problems at the originating distribution center, which caused a minimal delay.
Unfortunately, this minimal delay resulted in the truck’s encounter with the inclement
weather. As a result, the destination center may implement corrective actions at the
originating center to prevent this issue from occurring in the future. Ultimately, the
entire process becomes more efficient with the collection, analysis, and actionable
qualities of data.
In this example, a company may feel the aspect of metrics were left out. However,
metrics is the information given to the company by data analysis. In the example, the
metric showed a consistent delay at the originating center, which was corrected.
However, metrics may be used as key performance indicators to monitor a given
location’s activities. For example, the originating center may have order automated
tracking and processing sensors in place to immediately detect a delay.
Data Management and Transportation Services
Regardless of technology implementation, the human element of improving your
transportation management program must exist. Customers may want to speak with
customer service representatives, and some orders will come in person. However, this
does not mean automated processes, metrics, and real-time data collection, analysis,
and use in decisions will be eliminated for these transactions.
Today’s transportation providers must understand the value in big data analytics’
services. These services act as the initial point of improving efficiency across the entire
transportation network. Although we mentioned using historical data in making some
decisions, real-time feedback enables decisions to be made by current actions.
Essentially, this eliminates the “what if this happens like it did in…” hypotheses in
transportation.
When an organization or transportation company uses these services, the organization
will see an increase in profitability through reduced overhead costs and increases in the
efficiency of its workforce. As a result, more customers will be pleased with the
organization’s services, which will further drive demand for the transport company’s
service. This becomes a self-fulfilling circle of order fulfillment at lower prices.
The world of transportation management is constantly evolving, and today’s
transportation management systems must adapt to the chaotic events of daily life and
business practices. By using data efficiently and accurately, a company can grow beyond
expectations while providing superior service at more competitive rates. Through the
use of metrics, people, and services, today’s shipper will reap the rewards of an
investment into technology and “Big Data” analytics to continually improve their
transportation management program.
How Effective Logistics and Transportation
Management Leads to Scalability in Business
Operations
Regardless of current size, growing a business remains one of the primary goals of
any company. However, businesses often forget about the role of effective logistics
and transportation management for improving day-to-day business operations.
Ultimately, having the right system in place is the defining factor between a stale
growth rate and expanding current business size. Take a look at how effective logistics
and transportation management systems lead to scalability in business operations.
Scalability to Take on More Orders
When a business’s existing system reaches capacity, the ability to enter more orders
and generate a profit become hindered. The capacity of a current system is
comparable to a speed limit for business. If the business operates at maximum
efficiency for the current system, the total amount of revenue will never exceed this
threshold. However, increasing the efficiency within a system enables more orders to
be fulfilled and open up space for additional orders. Unfortunately, many current
systems rely on inherently inefficient processes and do not take advantage of
advanced management tools to improve overall effectivity.
Automated Transport of Items Within a Warehouse
An efficient transportation management system integrated into an ERP or WMS
considers all possible variables within a warehouse. These variables may include
current stock amounts, distance to travel from storage slot to pallet, and amount of
time to load the merchandise. As a result, each of these processes should account for
the most efficient processes in the warehouse.
For example, items from slot A should be located near similar items, which may be
ordered by the end-user concurrently, to reduce the amount of time needed to move
items from slot to loading zone. Therefore, the amount of time spent picking the items
is reduced.
An effective management system must take these aspects into account during sortation.
Fortunately, these events are cataloged automatically to ensure merchandise moves the
least amount of times within the warehouse, which reduces length of time in preparing
a shipment and helps workers adhere to dock schedules.
Flexible Shipping Processes and Scalability
Today’s customers have been given access to an unprecedented array of differing items,
which may vary from hazardous materials to delicate clothing in the same shipment.
Although this practice is beneficial for customers, it remains an issue for lost efficiency
and errors within the shipping process. How does a shipper conglomerate all of these
different items into a single shipment without risking damage or injury? The answer
rests with attaining a flexible, smart system.
A flexible system allows shippers to quickly sort existing stock and compile shipments
on smaller units. These individual packages are then added to tubs or containers slotted
for less-than-truckload shipping to help move goods fewer times while reducing the
number of times a worker must handle the product. By maximizing the use of space in
an existing fleet to meet the demands of many different-sized items, a shipper can
improve efficiency and flexibility.
The idea of flexibility due to improved processes leads back to inherent savings for
labor costs as well. If individual workers are needed less for business operations, this
means existing worker’s would have reduced workloads. This results in higher employee
satisfaction rates and savings for the company on overtime hours or hiring additional
workers.
Scalability and Retraction of Business Processes
Sometimes, scalability is only associated with a business’s growth. However, all
businesses will suffer from the setbacks of fewer orders, reduced demand for products,
or changes in the economy. Each of these factors could spell disaster without an
efficient logistics and transportation management system.
If an existing operation has an excess of workers, a reduction in orders would lead to
cutbacks across the entire enterprise. If the company’s production suddenly increases,
previous employees may be unavailable or less inclined to work for the company.
Unfortunately, every terminated or reduced-salary employee represents another
possibility for the company to lose money.
Efficient Systems and Inventory Control For Scalability
Managing inventory in one location can be difficult; however, managing inventory in
multiple locations becomes even more costly. An efficient transportation management
system must be able to handle the addition of new inventory, users, and new locations.
Without the ability to expand across multiple locations, an existing system would be
incapable of effectively monitoring and managing a company’s inventory.
Similarly, inventory control is an important concept in the management of a single
warehouse. Inventory control allows an organization to increase or decrease stock
counts to meet the expectations of a given shopping season. For example, summer
items will need to be increased during the warmer months, and holiday-themed items
may need to ordered and stocked prior to the arrival of fall. The management system
enables accurate inventory control through forecasting, which is the creation of reports
for the expected needs of an upcoming time period. By analyzing order trends and
current processes, the transportation management system can evaluate the company’s
needs and adjust business processes to meet the demand. Essentially, the overall
workload of inventory control is reduced as it pertains to scalability concerns.
Throughout the course of business, the demand for a shipper’s services will change.
Sometimes, business will be in high demand, and at other times, business will seem to
crawl at a snail’s pace. The overall goal of any logistics and transportation management
system is to improve efficiency while maintaining optimized operations. By
implementing an efficient system, the business can reduce or expand operations to
meet customers’ demands.
5 Benefits from Logistics Sustainability &
Efficiency
Driving business growth and reducing overhead costs remain the top priorities of any
business. Many business owners fail to connect these two functions to logistics
sustainability. Usually, sustainability is applied to ensuring operations do not negatively
impact the environment. However, achieving sustainability revolves around reducing,
not eliminating, the causes of environment problems. Instead, a sustainable solution
in the transportation industry focuses on improving individual operations and
movements to increase the efficiency of transportation. Obviously, a shipper cannot
actually control everything, but it can control how its companies’ products make it
from location to location. Let’s take a look at how logistics sustainability lowers a
company’s carbon footprint and increases customer affinity for your brand.
1. Reducing Emissions
Since the transportation industry involves the shipment of goods from one location to
another, the basic responsibility of reducing carbon emissions takes priority. Many
vehicles run on fossil fuels; however, implementing a “green” solution to today’s fleet
could mean the difference between a low and high carbon footprint for your company.
Today’s transportation industry experts understand how each mile of travel represents
additional emissions into the atmosphere. By reducing the overall number of miles
driven, the total amount of noxious gasses released is reduced. Consequentially, the
company can benefit from not having to pay excess fines or penalties for violations of
environmental regulations, which depend on the location of the respective shipper.
Furthermore, streamlining transportation options through high-efficiency means, such
as ocean transportation or transportation in electric vehicles, enables a shipper to create
an effective, sustainable solution to transport many goods across great distances.
2. Reducing the Amount of Waste Products
When thinking about transportation costs, the primary cost seems to always reflect fuel
costs. However, each vehicle contains thousands of parts, gallons of oil, and at least
four tires, which are all designed to wear out over time. Each of these products has a
finite life expectancy, and inefficiency in transportation will only result in the
replacement of these items at a faster rate. Unfortunately, this increased rate represents
the loss of sustainability within a given transportation company.
For example, driving with an empty truck from a destination to a distribution center in
another state creates many forms of waste. The life expectancy of all of the materials
in the vehicle are cut in half immediately without any benefit to the company. This
does not even take into account emissions nor wear on national roadways. Every
movement costs money, and some of these costs are not even the responsibility of the
company, such as damage to roadways. However, each consequential action, such as the
repairing of the roads, results in additional energy expenditure somewhere. As a result,
the company’s carbon footprint grows more with each movement.
3. Reducing the Amount of Energy Consumed
Speaking of energy, the amount of energy used by a shipper reflects its logistics sustainability. If
a shipper opts for a faster mode of transportation with a greater cost to the environment, the
consequences could easily outweigh the benefits. This is the great conundrum of the
transportation industry. The fastest option is not always the most efficient, yet the most efficient
option is usually the fastest.
It really does not seem like it makes sense, but by making small changes in the amount of
energy used across the board, from loading to packaging to transporting multiple parcel
shipments to go via the LTL mode, a company can get products delivered on time without
increasing the carbon footprint. Obviously, some customers will continue to expect immediate
or priority delivery. However, shipping a single item is inefficient. Shipping multiple items by
consolidation could be less damaging than shipping 20 different items in 15 different trucks
across multiple states. Essentially, the less time must carry a savings equal to or greater than the
cost of using the less efficient method.
4. Alignment With Governmental Regulations and Goals
Depending on your company’s location, you could face many different environmental
regulations and statutes for the production and shipment of your merchandise. If you fail to
achieve logistics sustainability, i.e., using logistics to support a certain level of sustainability, by a
specific degree, you could be on the hook for fines, penalties, and additional criminal or civil
consequences. Government-driven regulations have a basic goal of ensuring future generations
the resources to survive, and you have a share in this responsibility. Not only will you save
money by achieving sustainability in shipping costs, you can avoid these potential consequences.
5. Increasing Awareness Among Customer Base
Consumers are becoming more conscious about the type of products they buy and how the
respective sellers operate. The modern world and social media has made sharing information
about a company’s activities part of the lives of millions of customers, and your company’s
image depends on your honesty and role in achieving a sustainable future.
A few poor decisions could lead to massive backlash and boycott across social media channels,
and your business could fail. By using a carrier or 3PL focused on logistics sustainability and
optimization with proven sustainability practices in place, you can help minimize the scrutiny of
your operation and improve public perception of your company. Across geographic and
political barriers, customers are gaining more knowledge about how your company operates.
Sustainability seems complex, yet it’s simply taking today’s actions and improving them to ensure
plenty of resources for the future. Many logistics sustainability measures may require significant
investment; however, the rewards will exceed the costs. Your customers will view your company
with trust, and millennials will play a significant role in this process. Authoritative organizations
will not hand out penalties for violating environmental codes, and your business will thrive if
you follow a path to sustainability. Customers have an affinity for protecting the world for future
generations, and your brand has affinity for gaining more customers. Can you afford not to
become a partner in achieving a sustainable world?
5 Engagement Strategies in Managing a
Relationship With a 3PL
Prior to selecting and throughout your dealings with a transportation management
3PL, you will need to learn a few management and engagement tactics. These tactics
enable the relationship between the 3PL and your company to grow and prosper.
Unfortunately, failing to maintain this relationship is at the heart of many failures in
supply chain processes. To help make keeping this relationship engaged and managed
well, take a look at five things you will be responsible for.
1. Set Expectations at the Beginning.
Expectations are the catalyst behind all business decisions. Your expectations for your
business as a manufacturer or distributor are to improve production, satisfy your
customers, and grow. Similarly, the expectations for a 3PL will mirror and enhance the
needs of your supply chain. Yet, expectations can be difficult to explain and manage.
Before selecting a transportation management 3PL, explain your expectations for how
the 3PL’s services will improve your business. Define what type of services you want,
need, or have considered previously. Explain how your current processes work, and
listen to feedback from the 3PL. Furthermore, the 3PL will expect you to be
completely honest in your expectations, so do not feel the need to withhold
information. In fact, many 3PLS will ask you to sign a non-disclosure agreement
(NDA) to keep all parties’ information safe, private, and secure.
2. Communicate Often and With Many Different Representatives.
Often, business owners gravitate towards a particular representative of the transportation
management 3PL. This is based on initial interactions between the 3PL and each business.
Human nature makes others seek out familiar faces and personalities. However, withholding
communication from other people in your 3PL is only a hindrance to your business.
Additionally, some business owners fail to recognize the value in communication. With
advanced technologies, dashboards, and KPIs in place, communicating with a 3PL may seem
irrelevant. Why would the 3PL want to communicate when you can see all of their information
at a glance? The answer lies in continually improving your business processes.
Try to create a communication schedule, which contains specified times for meetings,
conference calls, or email notifications, at the onset of selecting your transportation
management 3PL. Furthermore, your master service agreement (MSA) should contain the
contact information of your primary representative and others in the 3PL who can benefit your
business.
3. Constantly Think About Risk.
Risk management is a huge part of an effective transportation management strategy. What
happens in the event of a disaster? How would the transportation management 3PL respond to
ensure the timely delivery and operation of your outsourced processes?
Your 3PL should be willing to explore all of the potential “what if ” scenarios. You should have
an intricate understanding of what the 3PL will do to ensure all of your processes are not
affected. Some of these scenarios may seem extreme, but you need to think about the overall
goal of driving your business forward.
If you feel the 3PL’s plan for addressing a particular issue does not stand up to your company’s
vision, say something about it. Each risk mitigation plan can be altered and improved, and your
3PL respects your input into the creation of these plans. However, staying silent will only lead to
disappointment and distrust, which undermines the value of hiring a transportation
management 3PL in the first place.
4. Enact Change Management and Training.
Your employees work for you. They have spent countless hours training and working to ensure
your company survives and grows. However, employees may be unwilling to trust your decision
to outsource supply chain processes, such as transportation management, to a 3PL. This is
where change management comes into play.
Change management reflects how you influence the change of current processes through your
employees. This may include seminars, webinars, conference calls, and training sessions. Every
interaction in your business represents another venue for effective change management. If your
employees do not embrace the forthcoming changes, managing the relationship between your
company and a 3PL will be much more difficult.
If you feel your employees will embrace the change, work to show them how the change will
benefit the company. You may be tempted to curse, scream, or yell about certain changes, but
your employees will be watching your behavior for how to act. If you experience stressors or
feel under pressure from the 3PL, do not give the employees a reason to doubt your rationale.
Your transportation management 3PL is meant to make things easier, not harder.
5. Do Not Impose Limitations on Your Selected Services.
In business, it can be tempting to avoid making purchases, entering long-term contracts, and
trusting others with your company’s responsibilities. However, going beyond these limitations is
crucial to the success of using a 3PL. As a result, your company must be willing to adapt to
changes in 3PL structure and processes, which will benefit your business.
Similarly, you must be willing to take a proverbial gamble on your 3PL. Sometimes, the goal may
not seem visible, and in some cases, the goal may appear impractical. However, the 3PL’s
success depends upon your success. If the 3PL fails to achieve increased production and
improvements in your supply chain processes, the 3PL loses money. Therefore, you can safely
believe that all decisions will reflect your best interests, even when they do not appear to.
Learning more about how to effectively manage a relationship with a transportation
management 3PL marks the beginning of a journey of increasing your supply chain processes.
However, this journey is not without risk, and a 3PL is designed to reduce this risk by constantly
working with you to increase production. Above all else, think of your 3PL as an extension of
your employees. Without your business, a 3PL would not be possible. Without a transportation
management 3PL, expanding your business may not be possible. By following these five tips,
you can stay engaged and maintain a positive relationship with the 3PL of your choice
5 Change Management Tips to Create a
Strategic Transportation Management Mindset
After deciding to use a third party logistics provider (3PL), you may be tempted to
continue operating as you have previously. Unfortunately, failure to make and
embrace changes will lead your organization to failure. Changing current processes
requires time and willingness to change, i.e. you must embrace change management.
Historically, consumers were driven to purchase by defect-free products and
unmatched customer service. As the world has grown more reliant on efficiency, a
shipper can no longer rely on defect-free product sales. Instead, the shipper must
change processes to reflect increases in productivity across the company. Fortunately,
many different models for increasing the value of change management exist. Take a
look at some of the most important ways to achieve successful change management
and increase efficiency, which remains the goal of all 3PL-partnered entities.
Identification of Needs Must Be Completed First
Initially, you must review your current shipping processes to identify problems and
areas that can be improved through change management. However, you must ensure
your organization does not violate any applicable rules and regulations, such as ISO
requirements. These needs do not necessarily reflect physical needs entirely.
For example, your employees may need additional resources, such as increased
accessibility to processing terminals or additional training, to make the appropriate
changes. Alternatively, some other needs focus on revealing information about your
business. Your 3PL will need to thoroughly review and assess your current processes
to identify what actions will be most appropriate for your specific organization. This
requires a great deal of trust between the 3PL and your organization. However, you
must also think about your employees’ perception of the change.
Helping Employees Understand Change Management
On the surface, using a 3PL may seem like a dangerous move to your employees. Essentially,
you are outsourcing some of your business practices to reap higher profits in today’s
competitive market. Your employees may view this decision negatively, so you must help them
understand the rationale behind the change.
You may hold additional training sessions on why your organization is retaining a 3PL. Explain
how the 3PL’s presence will increase productivity while reducing the stresses of current
employees. Furthermore, your employees must feel secure about their positions. Reiterate how
existing employees’ positions will remain intact or change to meet the improvements in your
organization.
For example, employee A’s typical job duties may be lessened by a 3PL; discuss what other areas
of your organization employee A may be interested in. This allows all employees to maintain
satisfaction in the workplace while embracing change management. However, you must not take
a one-size-fits-all approach to change management. You may communicate changes to your
employees in a variety of ways, but the key to successful change management rests with
maintaining clear, consistent, and frequent communication without your employees throughout
your unique organization.
Be Realistic About Changes
One of the most common misconceptions about using a 3PL is that there is an immediate
return on investment and elimination of all inefficient business processes within days.
Unfortunately, this mindset does not reflect an accurate description of a 3PL. Sit down with
your staff and 3PL, and clearly communicate what changes you hope to accomplish by using the
3PL. This may include decreases in dead time, increased shipping capacity, and reductions in
problems with inventory management.
Similarly, you must not be tempted to have one person responsible for all communication in
your organization. When considering the hire of a 3PL, your employees will probably hear
about the possibility before you ever made the decision. Ultimately, this will lead to backlash
about how quickly the changes will take place and how your existing staff will be able to adapt.
As a result, the role of your communication efforts will become even more prominent.
Increase Visibility in All Practices
Visibility drives efficiency for partnering with a 3PL. However, many executives, managerial
staff, and employees may feel existing systems maintain the most visibility possible. If your
organization has not revealed anything about everyday activities, you do not have an acceptable
degree of visibility for successful change management.
Think back to the issue of trust between a 3PL and your organization. Why would your
organization feel some information should not be shared? Does it revolve around proprietary
information, or do worries of layoffs exist? Each of these questions reflect common
considerations when preparing for change management. However, visibility is critical to
ensuring all processes are addressed and improved. If you do not disclose information about
everyday processes, you open the doors to unsuccessful change management and reductions in
the return on investment for using a 3PL.
Apply a Structure to Your Change Management.
With all of this information, it will be easy to feel overwhelmed and lost. However, you must
apply a structural model for achieving a successful transportation management strategy with a
3PL. This structure varies from organization to organization, and your structure can be mired
from existing models to innovative ideas from your employees for increasing efficiency and
change management. If you stay vigilant and maintain a set structure, the overall efficiency of
change management will be increased.
Logistics are both complicated and simple. Change characterizes the simplicity, yet changes also
reflect intense complexities for all members of your organization. When thinking about gaining
a competitive advantage and increasing your strategic look for transportation management, how
you embrace change affects the accuracy and return on investment of partnering with a 3PL.
When you clearly communicate, embrace, and reinforce these changes, across your organization,
you can increase productivity and eliminate waste where it lies. Your organization must be ready
to pivot to make these changes. How you do it should be clearly, methodically, and consistently
approached with caution and enthusiasm.
Staying Strategic to Execute Flawlessly
As any business executive can attest to, strategy is vital in order to achieve the desired
outcome of the corporation. In order for a business to further reach those goals, each
function of the business must have a strategy and stay strategic in the way they
approach that function. When it comes to the vital importance of transportation and
logistics management, it is no different. Strategy will allow a shipper to better
communicate with all of those involved in the shipping process. Staying strategic in
shipping instills confidence in those manufacturing products as they are sure to
receive materials in time. It also makes customers feel as if they are truly taken care of
and not simply responded to. In turn, this confidence makes your sales staff more
confident in getting new business. Simply, a strategic mindset makes the execution of
a business flow much easier and thusly creates a competitive advantage.
Some shippers may have the resources in house today or feel confident about the
sustainability of those resources. Some shippers do not have those resources at all and
feel at a competitive disadvantage. As laid out in this e-book however, no matter
where a shipper is in their logistics and transportation management functions, it is
important to survival to get to a strategic mindset. Often, leaning on a third party
logistics company can give you that competitive edge you seek..
We hope you enjoyed this educational e-Book on how staying strategic in logistics and
transportation management gives you a competitive advantage as a shipper.
Cerasis, a transportation management company founded in 1997, has always believed in the use
of technology to improve process to not only reduce cost but to stay strategic, competitive, and
have the ability to use data from technology to continually improve. In fact, one of our core
values is just that: continuous improvement of our people process and technology.
We built our Cerasis Rater TMS in 1998, launching it as web-based before Google was even a
business. Our (now Army, as our Development Manager, Jerel Byrd calls them) development
team are always continually improving the Cerasis TMS, as we know it is vital to have a system
that is not only innovative, but sound, secure, and enables those in transportation to do their job
all while doing it cost effectively.
Are you using a TMS to help manage your transportation department as a shipper? What are
you seeing in the space?
In addition to our transportation management system (TMS), the Cerasis Rater, when you are a
Cerasis shipper, you gain access to the following managed services:
• Transportation Accounting to include: Invoice auditing, one weekly invoice no matter
how many shipments, and freight payment services
• Comprehensive end to end freight claims management: if your freight is damaged or lost,
we will handle the freight claim on your behalf
• Carrier Relations: We will negotiate rates on your behalf and you get better rates thanks
to our buying power
• Inbound Freight Management
• Reverse Logistics
• Robust Analytics and Reports
Want to learn more? Visit http://cerasis.com
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