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management-transportations Pro Tips transportation-solutions

Transportation Management Companies Can Help You Get Ahead

Why do some companies achieve savings and gain a logistics advantage while other companies are left guessing? As a transportation management company, we work with numerous types of small and midsize shippers and distributors. The biggest difference in the amount of benefit we can provide typically hinges on one common factor — transparency.

Companies have two options: they can either create the advantage internally or they can source help to achieve it. Either way, an honest assessment exploring how you currently stand against world class is the best place to start. In order to offer transparency to someone outside their own company, shippers and distributors have to get a little vulnerable — something that may not come easy for most. As we all know, inviting someone into the company to see how the sausage is made can be uncomfortable.

If anyone understands those feelings, it’s that of a business owner that has built their business from scratch. Business owners know that companies are built by those who have cared enough to make it personal. While it may not always be a perfect fit, everyone who puts time into a business adds a bit of themselves to it; the company becomes a reflection of who they are. Whether it’s the owner, executive, or the newest employee, they take ownership in the company, and that’s a good thing! I am not suggesting that you become transparent with just anyone outside your organization; your company and data need to be protected. But if you have decided that you do not have the time or expertise in-house and would like an assessment done, find a transportation management company that you can trust with your data.

While there may be a natural desire to keep the company door closed to others, I find that the most successful business people are strongly motivated by their desire to be the best and, accordingly, prioritize their aspirations over their fears. They want to be the best in every aspect of their business.

Many companies have recently made a tremendous investment in improving their supply chain operations, but others still have not. Without investing in improvement, it will likely be difficult to achieve a competitive advantage with your supply chain. An honest benchmarking assessment arms you with this information. In this world of two day shipping, it doesn’t matter what you’re shipping, customers are expecting (and sometimes requiring) quicker order-to-delivery cycles, lower costs, and more predictable deliveries — all with the convenience of shipment visibility or notifications that can be tracked and documented. Are you currently able to check off all of those boxes?

To some, making the pivot to supply chain excellence seems like something that is too overwhelming or can be put off until another day. Unfortunately, the longer you wait, the gap between what you are able to accomplish and what customers are requiring is only going to widen. The wider the gap, the harder it is going to become to do something about it.

For that reason, some have turned to adaptive transportation management companies to overcome roadblocks that stand in the way of supply chain improvements. Below are some common roadblocks that we have helped our managed transportation customers overcome.

Roadblock 1: Costs
When making any change to your business, the first thing you may ask is “what are the costs?” How can you afford to pay for the effort?

We see successful companies enter into self-funding projects where the return is greater or equal to what it costs to engage in them. For example, it is not unusual for our customers to receive a 50 percent return on their investment. In other words, for every dollar that they spend, they show $1.50 in savings or profitability that otherwise would have not been achievable. Conversely, we often see those who do not invest in supply chain or transportation because of the “cost” of hiring, training, and managing a team. They may then look at that as a “savings.” However, the reality is that just because someone chooses to not hire someone for a role that needs to be performed, you cannot consider that non-paid expense as savings. If a role needs to be filled, but is not, then the actual cost to the organization is greater than the perceived “savings” of not having the role’s functions performed.

Specifically, customers need to ask themselves how they can manage freight costs. There are a few ways to approach this.

Strategy
Our customers work closely with us to develop a strategy to reduce freight costs. Solutions vary depending on the complexity of the supply chain but results often come from implementing strategies in one of these key areas: sourcing, shipment optimization,  equipment optimization, carrier selection, centralization of processes, and controlling cost previously controlled by vendors or customers.

 

Spot Market TL Costs
Our managed transportation customers stopped playing the game. When freight goes to the spot market, the typical response is to use a broker. However, an article from DAT Broker Benchmarking, Q4 2019, shows that the average brokerage margin across the top five brokers has been 17 percent for the last three years. Our managed transportation customers pay based on a prearranged markup of 10 to 12 percent — an instant savings of 5 to 7 percent when compared to spot market freight rates.

This works because the shipper and transportation management company are transparent with each other, creating efficiencies and expediency for both parties. We are able to reduce our rates, in turn reducing the shipper’s rates, by streamlining the communication flow, requirements, and processes. Additionally, our streamlined process ensures that freight is quickly getting into the hands of core carriers and extended networks.

In the truest sense, time in money here. According to Uber freight, the cost from moving from your core carrier to spot market is over 15 percent. In other words, communication is king. The tools and processes that they use enables quick and effective communication, allowing them to quickly reach their core carrier base in a clear and concise manner, saving them money.

When the core carriers are not available, our customers get quick access to a network of assets. They open the doors to competition and use strict onboarding and compliance monitoring standards that are set to their internal requirements. Our customers use vendor management technology and integrations to ensure that all of their carriers are screened and monitored in real time to ensure shipments are moving legally and safely.

LTL Costs

Because we have less overhead and access to some of the most competitive blanket contracts on the market, our customers are saving money. They don’t have to have the largest volume of freight for good LTL rates because they get access from us. More importantly, they get support and guidance when they need it. In this new COVID-19 world that we live in, I often hear that even LTL takes more time to manage then it should. Our managed transportation accounts ask us to take that extra burden off of their plates — something that we are more than happy to do. As a result, they spend less time getting pulled away from their duties and are able to be more effective in their other roles.Leveraged Rates
Some of our managed transportation customers save immediately when they gain access to our extensive network and leveraged rates. For example, our partnership with TForce Worldwide, which has millions of LTL spend, provides instant savings for those customers that do not have enough volume for their own aggressive LTL contracts.

Roadblock 2: Handling Changing Carriers or Forwarders
We have helped many of our customers get increased access to capacity where needed and keep the providers they like. They often ask, what if our current carriers are not sophisticated enough to connect?

It’s not unusual for our customers to have created and cultivated good carrier/forwarder relations that they want to maintain. While we encourage our customers to keep their good vendor relationships, sometimes it is simply not enough. Many of us have found lately that capacity is king. When our customers need more access and capacity, they get it without an extended network of proven forwarders and carriers. But even then, it’s not always easy. These days, someone has to take time to fight for that capacity. We fight for our customers, and because they get capacity faster, our managed customers avoid expensive expedites and costly customer order delays.

When our customers bring on new service providers or evaluates their current providers, there is a good chance that they already have access to their ELD’s for shipment tracking through our systems. A recent study performed with our API integration partner found that over 25 percent of the 2,500-carrier sample we provided are already live with ELD integrations and that 49 percent is live with mobile tracking. Our managed transportation customers plug into this connected extended carrier network (or invite their own carriers) without needed internal IT resources to make that connection. It only takes a request from the users of the system and an acceptance from the carrier to make it happen. Once that is done, we manage the rest and our customers get live tracking from service providers.

Additionally, our customers have near instant access to API connectivity with over 800,000 carrier fleet ELD’s, Ocean lines, Airlines, and Rail and LTL carriers so that they can quickly gain visibility to their shipments, as well as share it with their internal and external customers.

Roadblock 3: Using Your Existing Team to Operate the Solution
As a business owner, the number one thing that I often hear that holds companies back from growing is how to get A-players when and where you need them. Our managed transportation customers chose to not take on the expense and effort of finding, hiring, training, retaining, and paying for A-players. Instead, our managed transportation customers get access to A-players that can act on behalf of their organization with their existing staff. Additionally, they are working with employees that have not only been trained or certified in transportation but in communication as well.

Roadblock 4: Finding the Time, Infrastructure, or IT Budget
It can be overwhelming to think about finding the time, infrastructure, or IT budget to acquire the technology needed to be best in class. Our customers once faced having to find the time to put a team together to select and implement the right technology to provide meaningful shipment visibility. They chose to leverage our experience and knowledge. By starting with a baseline solution built on best class practices and technology, they are able to make the incremental changes that their unique circumstance requires.

Once tracking integration is in place, our customers utilize Shiptransportal’s proactive monitoring systems to manage shipment exceptions (early or late pickups and deliveries). Some of our customers receive tracking information integrated into their enterprise systems via API or EDU communication, pending their preference. While our team is actively pursuing and resolving transportation issues, our customers are able to focus their time on any internal and external customer communications that are necessary to lessen the impact of any unfortunate delays. The extra time that our customers spend in customer account management differentiates their level of service from the competition.

Roadblock 5: Gaining Control of Freight Expense
Due to the pure scale of transportation expense, it is not unusual for finance to be the driver of change to the supply chain. They have to be able to quantify all expenses once incurred. Our managed transportation customers utilize our teams and systems to line-item audit and dispute all of their freight bills. Once too cumbersome an effort, our customers are able to utilize a highly automated solution with the use of AI to have all of their bills audited in detail. This not only enables our customers to ensure that they are only paying what they owe, but also captures their shipment history in a meaningful way. Our customers are armed with new data that helps them prepare for future negotiations and freight savings. Additionally, finance departments no longer have to estimate freight accruals or gather them from multiple sources. Instead, they receive regular scheduled reports by GL code accounting for all accrued freight expenses.

In short, we understand that being transparent is tough when it comes to your company’s performance. We see companies winning and losing everyday based on how they handle transportation management. For those who have found it difficult to create a competitive advantage with their supply chains internally, talk to a few transportation management companies and assess them for capability and fit. We often find that when there is a good fit, working together is easy and reaching your goals becomes achievable. For those who are still unsure, reach out and ask for a free assessment to determine how you may benefit. Or, take our 60 second gap assessment, and we will benchmark you against world class. We will perform a high-level assessment, and you can take the next steps armed with information.

Other news: Shiptransportal Crowned by Crown Royal and Carolina Panthers.

It was an honor for Shiptransportal to receive recognition from the Carolina Panthers and Crown Royal as a winner in their “That Deserves a Crown” program. Certainly special coming from an organization that I have respected for doing a great deal to support the Charlotte community!

 

 

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management-transportations Pro Tips Third Party Logistics transportation-solutions

Is your Transportation Management Strategy Best-in-Class?

What Is It Costing You to Not Execute a Best-In-Class Transportation Management Strategy?

Take our 60 Second Survey to see if the right transportation management strategy can make your company more profitable.

A 2018 benchmark survey, performed by Descartes Systems Group, showed a relationship between the strategic value of transportation and financial performance. The higher the strategic value, the better the financial performance. Specifically, the results illustrated that companies that viewed transportation as a competitive advantage were five times more likely to have industry-leading financial performance. Top performers were 18 percent more focused on customer service and 29 percent more focused on business growth. This report went on to show how top performers approached transportation challenges. 60 percent of top performers were looking at ways to change transportation strategies to prepare for capacity, while only 35 percent were looking at changing service providers to solve the problem. For underperformers, the reverse proved true; 55 percent were more focused on changing providers, while only 27 percent were considering changing strategies.

In other words, a best-in-class transportation management strategy will help you control transportation freight expenses and has a positive impact on key stakeholders touched by transportation. When done right, your company will be more profitable thanks to reduced freight costs and other related expenses. Your transportation management strategy should consider not only the line haul and discount rates but also the cost benefit to sales revenue. Consider how transportation impacts the cost to support customer service, accounting, finance, shipping, receiving, and inventory levels.

Additionally, a good transportation strategy should be sustainable, flexible, and agile — regardless of external factors that may occur outside of your organization. But creating and executing such a strategy can be overwhelming, which is why we recommend creating a plan that can be built and improved upon. Rather than expecting to start with a perfect plan, create the building blocks that will lead you to a best-in-class strategy.

Common Mistakes
The most common mistake in a transportation strategy is treating transportation too narrowly, like it’s an expense that can be controlled if only you can just find the lowest cost provider. This strategy leads many to taking too many chances and, as a result, overpaying to find success. Replacing the transportation provider is just one tool in the toolbox, and a hammer can’t fix every problem.

Without the right strategy in place, changing out service providers is a reaction to a problem, not the problem itself. It’s important to consider the cost to sales revenue and the cost to support those revenues. Otherwise, little is being done to make your company more profitable.

Below are some common transportation strategies that you may be tempted to try. These “strategies” look at transportation too narrowly, often negatively impacting your company’s profitability.

The RFP
Many companies are tempted to hold an RFP each year, and why wouldn’t they be? RFPs are alluring and put you in control of the process. They promise savings nearly every time, and if the RFP doesn’t show any savings on paper, the results don’t have to be implemented.

RFPs are an integral part of any transportation management strategy — but they aren’t a strategy themselves. Here are some questions to ask yourself to see if you’ve fallen victim to an RFP strategy trap:

  • Have you ever held an RFP where savings, despite claiming to save you 10 to 15 percent on your freight, never materialized? What were the reasons it failed? Did they stem from areas under your control?
  • Did all carriers raise rates as a result of market rate increases?
  • Did carriers with the lowest rates result in customer complaints?
  • Did selected carriers not have enough trucks?

All of these things are out of your control, so consider how you reacted to them. Was your response to hold another RFP?

Plug and Play
When it comes to salespeople, there’s no shortage in the transportation industry. They are literally everywhere. Most likely, you’re fielding sales calls that promise to save you 10 percent on freight multiple times a day. With a seemingly bottomless supply of transportation providers that promise to cut your rates, it can be tempting to exchange one service provider for another in the hopes of meeting your objectives.

Both the salespeople and marketing teams of carriers and logistics companies have done a great disservice to their industry by encouraging shippers to swap out carriers and brokers with the promise of freight savings. Changing carriers as quickly as you would change a broken lightbulb leaves little room for real conversation on the shippers’ overall strategy and how the service provider fits into a defined role for the organization. Not every transportation service provider is suited to play the same role — even if their trucks look exactly the same.

Like the RFP approach, this “strategy” is much too narrow in scope to have any real impact.

If It Ain’t Broke…
After churning carriers, brokers, and 3PLs over the years, it’s no wonder that when you find one you like, you want to hold onto it. Chances are, you’ve come to the conclusion that chasing the lowest cost provider can cost you in other ways that may not be reflected in the line haul charge or discounts. Since you likely wear many hats, you have learned that, if you let it, transportation can consume your time and take you away from the other key roles that you perform for your business — something that takes time away from generating revenue growth.

If you operate under “if it ain’t broke, don’t fix it,” you are likely seeing some of the benefits that having a good transportation service provider can have. With a good service provider in place, the notion that you can impact both expenses and top line revenue with good execution (including transportation) has only been reinforced. However, you should always be seeking a way to gain additional advantage over the competition.

Customers are becoming increasingly sophisticated. They are starting to ask for collaboration tools that contribute to a responsive sales force that is able to provide accurate all-in pricing, a customer service team that can immediately identify the location of an existing order with predictive analytics, or online access to shipping documents like Bill of Ladings (BOLs) and Proof of Deliveries (PODs).

You see the same types of requests coming from your purchasing teams for the inbound freight. While some transportation service providers will help pick up your freight and deliver it on time at a competitive rate, you’re now seeing some gaps in your current strategy — and they don’t meet your customers’ newest set of needs.

Since COVID-19 has changed how and where people work, these gaps have become more evident. Now, moving information and physical product has become more challenging than ever. Additional friction in the supply chain has increased delays in communication and product deliveries, putting more pressure on your customer service and sales teams. Your current service provider is good at moving freight, but are they equipped to help you tackle this new opportunity and further separate your company from the competition?

Developing a Complete Strategy
So what do each of the above “strategies” have in common? None of them are strategies; they are the tactical execution of part of a strategy. By themselves, they are largely ineffective in helping you to move the needle on your company’s profit.

In each case, the service provider is treated like an interchangeable part, serving the sole purpose of moving product from Point A to Point B. Operating like this ignores the fact that transportation touches more parts of the operation than Point A and B. Transportation doesn’t only impact the shipping and receiving warehouses, no matter what price you’re paying. And when each of these strategies fails to meet expectations, it is never for a reason you can control.

Each of these so-called strategies focuses on “line haul” or “per pound” freight expense while failing to consider how operating without the right transportation strategy can lead to lost customers, lost account growth opportunities, lost efficiency, lower employee morale, higher employee turnover, lost production time, and often lower profits. By not focusing on a more complete strategy, they are each running the risk of creating a transportation capability gap that will inevitably impact their company’s competitiveness.

Increasing Profitability
When executing the right transportation strategy, your company will be more profitable. Here’s why:

You’ll Stop Repeating Past Mistakes
By implementing a strategy, you can assess what is working and what needs to be fixed. Doing so will allow you to improve upon your strategy and eliminate costly mistakes. This puts you in a direct position of control, rather than leaving you at the mercy of your environment.

Differentiate Yourself From Other Small and Medium Businesses
As a small and medium business, you are likely competing on service. If you see transportation only as a way of moving product from one point to another, you have missed a chance to differentiate yourselves.

Reduce Silos and Improve Workflow
A complete strategy will help you remove silos and improve workflow between departments such as customer service, sales, and supply chain and production. It will help make the user the center of the solution, no matter the department. With the right tools in place, you can put shipment data that will help them to perform roles better right at their fingertips.

Generate Future Revenue
With a complete strategy, you’ll get your time back. By spending less time on “urgent” problems, you’ll be able to spend more time on generating future revenues. How much money did you save last year by managing your freight on your own or by not managing your freight at all compared with having a transportation management professional helping you? How well were you able to execute your transportation strategy? How much more profit could your company have made if you and your team spent that time working with customers, marketing, sales, or production?

Save Money
Putting the right strategy in place includes identifying and implementing cost savings measures. The ability to identify and execute on these opportunities will save your company money.

How complete is your transportation management strategy? If you need help, let us benchmark you against best practices and help you create a roadmap to success. Learn more about our services by giving us a call at (980) 999-8003. We can help make sure you’re on track.

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transportation-solutions

How Software Solutions Can Make Your Shipping Process Turn Key

Nowadays, discovering optimal shipping processes is only the first step towards developing the best possible shipping logistics solutions. The rise of computing software has left few areas of business untouched and shipping is no exception. In fact in many cases, software applications are what allow a sound logistics strategy to be executed.

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transportation-solutions

What You Need to Know About Your Shipping Options

From the perspective of many businesses, shipping is shipping. When they need something sent out, they search for the cheapest option, contact the carrier, pay a fee and move on. There is, however, much more to the process. At least, there should be, if companies are looking to find the best rates, highest savings ratio, or the overall best service available.

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transportation-solutions

Shipping Compliance and Regulation: Why It’s Important to Do Your Research

Understanding the regulations and customs requirements surrounding international shipping is the only way to move freight across borders in a safe, legal way. When you consider the ramifications of non-compliance, this knowledge becomes vital to any company that imports or exports goods.

That is why researching regulations is so important. Not only does achieving an advanced comprehension enable a company to operate with full compliance, it allows them to construct a shipping plan designed to follow the rules without hampering performance.

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transportation-solutions

The Ramifications of Non-Compliance

Businesses that ship internationally run the risk of encountering regulatory restrictions and customs issues. Most businesses that fail to comply with the rules of shipping over borders do so because of ignorance, rather than a willful attempt to circumvent the rules. Sadly, a lack of knowledge regarding the rules does not excuse non-compliance, and non-compliance can result in several unwanted ramifications.