The logistics industry sways to meet demand and adjust to fluctuations. Such fluctuations range from weather to limited capacity, and shippers need to keep the influences in mind when tendering freight and planning routes or loads. Freight exception management describes when things change and affect expected shipment arrival or transportation. Fortunately, a modern transportation management system (TMS) can enable better exception management. To keep spending under control, shippers need to understand the challenges in managing exceptions, how a TMS enables better management, and a few tips to optimize the process.
The Challenges Associated With Freight Exception Management
Freight exception management comes with multiple challenges, including:
- Inability to understand how market demand will translate into available capacity and shipping.
- Unforeseen weather events, such as hurricanes and winter weather, which may inundate travel and lead to significant problems.
- Political turmoil, such as global trade tariffs that delay freight shipping, as well as freight moving through vital routes in war-torn areas.
- Poor communication and collaboration with carriers to intervene when crises arise.
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Prioritized Exception Management Increases Efficiency
Prioritized exception management can improve operational efficiency. Exception management means knowing how to respond when to respond, and the best way to respond, to eliminate the risk of disruption, and handle adverse events. Even changes within capacity can require exception management, rerouting shipments, and redefining the loads accordingly — moreover, the issue of capacity weighs largely on the minds of today shippers.
As reiterated by William B. Cassidy of the Journal of Commerce:
“The DAT and Coyote forecasts resemble the IHS Markit producer price index (PPI) forecast for long-distance truckload pricing, which shows rates rising back into positive year-over-year territory in the first half of 2020, with the PPI rising 3.2 percent year over year in the second quarter. That may not equate to a 3.2 percent increase in rates, but indicates direction.
Capacity will be critical to how fast or high truckload rates rise. The US truckload market was awash with capacity throughout most of 2019, as economic growth slowed and a slew of new trucks ordered in 2018 arrived in motor carrier yards. Coyote believes that capacity is under-utilized, especially in secondary markets, and some is leaving the market.”
As capacity changes, more exceptions may occur. Customer demand is only increasing, and carriers will be forced to rethink their current capacity strategies. Thus, shippers will respond, taking advantage of available capacity and ensuring tendered freight aligns with freight delivered and billed. In a sense, exception management also plays a role in keeping costs under control through data-based accounting and documentation processes.
Tips to Enhance Exception Management
Shippers that wish to improve exception management should follow these best practices:
- Take advantage of artificial intelligence to automatically handle recurring exceptions.
- Create real sets to define what actions to take when an issue arises.
- Choose a TMS that enables automated exception management.
- Leverage data on exceptions to understand why they occur, how to prevent them from recurring, and what steps are necessary to ensure continued success and reduction in freight spend.
- Use machine learning to increase the level of automation in exception management further.
- Remember to handle the unusual exceptions with grace and dignity, relying on all the facts to make an informed decision and reduce delays.
- Integrate all shipping systems within an overarching TMS to ensure data is timely, accurate and reflects the needs of your supply chain.
Leverage the Power of Automation With the Right Partner
Exception management represents the latest way automation may help shippers understand operations and deliver on increasing customer expectations. Since handling exceptions the “old” way results in high labor costs and risk for error, all shippers need to rethink their freight exception management processes and apply these tips to achieve success. Of course, using a modern TMS for exception management will also increase value and offer new functions that further refine shipping management.