The trucking industry fluctuates to accommodate changes in demand, customers rotations, available capacity, and much more. Meanwhile, changes within politics and environmental regulations, including the US-China trade tariffs, also influence the industry. For shippers to remain successful and competitive, they must understand the key freight management factors to consider, ranging from those affecting risk management through improved logistics management.
What Risks Reside Within the Supply Chain?
The supply chain is inherent with risk. Shifting capacity, changing regulations, and other risks influence freight rates and therefore freight spend. However, freight spend is subject to countless influencers, and shippers operating traditional, unprotected, and manual-intensive processes will see an increase in freight spend. As a result, it is imperative for shippers to take these factors into consideration when assessing supply chain risk and freight rates.
- Mode. The specific mode of transport, such as less than truckload, full truckload or parcel, will affect freight rates. Furthermore, modes of transport, such as rail versus ocean shipping, have a dramatic effect on supply chain management.
- Capacity. Available capacity reflects a careful balance between available drivers, load planning, preference for acceptance of freight, and even shipper data. Failures to provide carriers and truckers with adequate data and ample time for scheduling will naturally lead to delays in delivery.
- Drivers. Drivers are another influencer in supply chain management. Without adequate drivers, shippers cannot move freight to other business-to-business partners and consumers. At the same time, drivers carry immense power, the ability to refuse or disagree with freight pickups among certain shippers. As a result, shippers should work to gain “Shipper Of Choice” status among carriers, reflecting the ease of loading them, how or unloading, at a given dock.
- Preferences and Amenities. Speaking of driver preferences, these preferences will influence freight rates as well. Carriers that operate multiple trucks will receive feedback from their drivers, and drivers that have positive experiences are more likely to lead to discounted and preferred rates, helping shippers keep freight spend in check.
- Time. Time remains a constant influencer of freight rates. Consumers want their products yesterday, and while shippers cannot realistically determine the exact volume of freight to be shipped within the next 24 hours, they can use analytics, transportation and freight data, and advanced technologies to better improve demand forecasts, which will have natural benefits throughout supply chain planning.
- Footprint. Lastly, the footprint of supply chains affect supply chain performance. After all, supply chain leaders with available facilities around the globe can meet e-commerce consumer demands easier and with fewer delays.
- Consolidation. Freight consolidation involves the combining of smaller freight, such as LTL or parcels, into larger shipments, reducing costs along the way. However, consolidation requires more data and planning than simple shipments, so timely and accurate data becomes another factor in effective freight management.
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Considering All Freight Management Factors Enables Informed Decision Making.
A comprehensive approach to managing freight management factors means shippers take the time to consider all possible influencers and assess the best route, mode, raging, and classification for each shipment. As explained by Multichannel Merchant:
“Businesses are always analyzing their operations and seeking to streamline them, work more efficiently and reduce costs. But when it comes to shipping expenses, many assume they are fixed costs that cannot be changed. They maintain the status quo and lose out on potential savings.
Actually, there are many innovative ways to reduce freight costs that are rarely explored. Several of them are as simple as conducting freight pickups during off-peak hours or days of the week.
Implementing these practices is a smart choice that can reduce freight costs by as much as 50%. However, it takes a keen eye to examine your freight practices and challenge assumptions.”
For reference, the balance of appropriate carriers and even consolidated versus parcel will influence freight rates and improve freight spend.
How to Apply the Factors in Shipping Decisions
The TMS is likely the biggest freight management factor to influence your organization. So, instead of applying tips to improve overarching freight management, take these considerations in choosing and using your TMS wisely.
- Ensure all data entered into the system of record, such as the transportation management system (TMS), is timely and reflects the actual needs of the shipment.
- Leverage third-party resources to tap into a wider array of carriers, which will increase competition and ensure shippers pay a competitive price for shipping.
- Recapture lost costs through integrated invoice auditing and freight accounting features.
- Stand out from the crowd by using big data analytics to understand your operation, gaining insights where possible and paying insights to improve performance.
- Plan for peak season performance and optimized processes well in advance, such as reevaluating your systems of record, investing in outsourced staffing services, reviewing available carrier relationships, and negotiating peak season rates, well before the industry begins to think about the increase in demand, such as January of the applicable year.
- Conduct recurrent ROI analyses, which help shippers understand whether ROI will be achieved now or later, and ROI analyses build an ongoing business case for the reinvestment into supply chain systems and technology.
- Take advantage of business intelligence tools, such as analytics and reporting functions, to streamline collaboration and ensure stakeholder stay informed of all relevant metrics.
- Invest in cloud-based, centralized platforms that reduce delays and leverage real-time data to keep everyone informed in real time and enable responsiveness within the supply chain, explains Supply Chain 24/7.
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Take the Considerations Into Account Before Ignorance Costs Customers
As global organizations look to digital transformation to change the foundations of how they operate, global supply chains will leverage more data and technology to streamline operational efficiency. Shippers that wish to reduce freight spend and improve customer service levels need to look to these newer systems, such as the Cerasis Rater, to gain a competitive advantage and build an appropriate mix of solutions and freight shipping options. As a given the right freight management factors into consideration, it is possible to keep freight spend under control and achieve significant benefits simultaneously.