Ensuring carrier compliance is a critical concern for shippers. Poor carrier compliance may lead to financial repercussions, blowback from consumers, delays in order fulfillment, out of stock warehouses, damaged freight and even perished freight. The legal ramifications of poor compliance are amplified on the international stage, and violations could render all freight spend cost savings meaningless. However, managing carrier compliance with a transportation management system (TMS) can help. Shippers that understand the high costs of poor compliance, how a TMS improves compliance, and a few best practices for its use can restore compliance within their supply chains and reap higher efficiency.
The High Costs of Poor Carrier Compliance
Poor carrier compliance results in both direct and indirect costs. Direct costs include higher freight spend deriving from the need to work with more carriers and reorder a product, especially when freight is lost or otherwise detained. Indirect costs referred to those in the downstream supply chain, including costs to retailers from items being blacklisted as “out of stock” and, naturally, lost time dealing with exceptions from the norm due to choosing carriers that have a history of low performance in regards to your freight. The same process and failure of carrier compliance apply to the reverse logistics supply chain management as well. Returns may take longer to complete, and consumers will voice their dissatisfaction in reviews, harming your company’s reputation with future customers and vendors. Depending on the origin and destination of a shipment, failures within compliance could lead to the assessment of fines and penalties for the carrier who is not compliant, not to mention the loss of carrier-of-choice status and even out-of-service (OOS) designation for its drivers, notes the FMCSA, leaving you without carriers in your network that can reliably move your freight.
Carrier-of-choice status is not a new ideal, but it has roots in the measures taken by the industry to increase capacity over recent years. As carriers worked to increase trailer space and containers, demand shifted slightly. Therefore, capacity is still tight in certain modes, such as parcel and less than truckload, but, overall, carriers have worked on increase available capacity. As a result, carriers must now do the proverbial heavy lifting to keep relationships with shippers alive. And shippers must use technology, such as a TMS, to act as a repository of available carriers, providing rates of those carriers in a TMS, and metrics to help in the creation of a carrier scorecard to make sure each location remains compliant in the carriers they choose for each shipment thanks to pre-determined business rules set forth by the organization’s leadership. With so many companies turning to transportation management technology to streamline management, compliance failures are no longer acceptable.
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Benefits of Using a TMS on Compliance
Keeping carriers compliant means ensuring they fulfill their obligations of delivering your freight on time, damage-free and do not present undue harm to anyone else in the supply chain in the course of work. It is a complex notion, but it is possible to track compliance by merely recording thru data capture the performance of all of your carriers in your network. Yes, it is time to bring data into the interaction. As explained by Mihlfeld & Associates, using a TMS provides an immediate boost to carrier compliance, offering these key benefits:
- The use of data to track a carrier’s performance allows for ongoing process improvement.
- A TMS consolidates the possibility of thousands of freight invoices from several carriers, auditing each and everyone to reconcile variances, offering streamlined payment processing.
- More improved exception management. With the core processes of procuring a carrier and creating a bill of lading all easily done thanks to the TMS, shippers can then use that time fo focus on exceptions, like freight claims or recovering in-transit shipments that go awry.
- Improved carrier compliance provides a stronger reputation of your company to your customers by using reliable carriers who deliver your freight on time, damage-free.
- Leveraging a TMS, namely a 3PL-supplied TMS, puts the stress of handling carrier relationships in the hands of a third party. This includes carrier rate negotiations, auditing of freight invoices, and resolution of freight claims, all on your behalf, so you can put the time savings towards more strategic initiatives your company wants to focus on.
How to Use a TMS to Improve Compliance
Shippers can use a TMS to achieve great things in supply chain management. Unfortunately, they may overlook critical values within the use of a TMS that are not always obvious. While a TMS can provide real-time visibility into freight spend, the data contained within it holds significant value. Shippers can learn more about where freight is, and they can work to handle exceptions when they occur. Using a TMS is one of the few tactics that can have lasting benefits for the whole supply chain, so shippers need to think about how they can use a TMS to improve compliance. Some essential ways to boost compliance include:
- Use the latest in cloud-based, SaaS TMS that also offers solutions from a firm that handles those things that occur outside the TMS, i.e., exceptions, that will only drag on your resources.
- Take advantage of track & trace features of visibility solutions to track driver location, expected time of arrival, and more in real-time.
- Automate notifications to keep drivers informed of changes to the freight and dock schedule.
- Get supply chain partners on board with using the same system. For example, Cearsis offers a web-portal login to our shippers’ vendors to arrange for freight pickups for inbound freight shipments.
- Integrate your supply chain management platforms with the TMS such as your ERP, or in the case of some of our customers, integrate a dimensionaliser to the TMS to better capture dimensions, including taking pictures of the freight before it gets loaded, helping in freight claims resolution.
- Use the reporting features within the TMS, such as carrier compliance reports, least-cost analysis reports, and more, to gain transportation business intelligence and understand carrier performance and compliance.
- Use data to enforce compliance and improve carrier renegotiations of your freight rates.
Hold Carriers Accountable With a Connected, Advanced TMS
The use of a TMS gives shippers the ability to look beyond freight quoting and keep carriers accountable for their actions. Although carriers are not necessarily part of a shipper’s business, they play a vital role. Failures among carriers will lead to increased rates of customer dissatisfaction, higher freight spends, poor planning and execution of logistics, and much more. Instead of putting it all on the line, shippers need to invest in a dedicated TMS, such as the Cerasis Rater, sooner rather than later.