Freight payment, freight audit, sourcing and order management — these are just a few of the standard tactical components that customers require to execute basic transportation management solutions. But with a tough business climate expected to be challenging far into the future, a competitive transportation management solution must go beyond the basics. Fuel costs are rising, legislative and regulatory impacts continue, rates are increasing and the driver shortage is reaching crisis levels. It’s imperative that the transportation moves that customers and shippers make reflect the most optimal way to move inventory and maximize the capacity of the truck and the driver.
Customers looking to increase their competitive advantage amid this landscape can choose to partner with a logistics provider to help them execute transportation services with a systemic view, combining people, processes and technology to drive out waste and ensure continuous improvement. The end goal is to design a smarter network that leverages best-in-class execution systems that enable sound Lean business processes. It’s not about simply staying in the game, it’s about achieving sustainable success.
Rate management and consolidation were once the go-to initiatives implemented by logistics providers to create competitive advantage for transportation management customers. Innovative providers, however, will tie the tactical management piece — from sourcing to settlement — to solution engineering. The goal is to determine where optimal nodes should be placed, how to accelerate cycle and delivery times and how to move customers’ inventory faster through the transportation services. Providers’ solutions will also incorporate advanced transportation management technology, which includes front-end, web-based solutions, software applications for projects ranging from shipment and network planning to business intelligence, analysis and modeling, as well as strong data quality management.
Through this approach, Lean principles and tools are applied to discover, define, design and measure solutions to eliminate waste and excess cost, introduce new efficiencies and build in continuous improvement. Combined with state-of-the-art technology and expert personnel, customers gain a clearer picture of the current state of their transportation networks. Lean tools like value stream mapping clearly depict the physical flow of products, information and finances through the supply chain. This exercise reveals areas where waste exists and leads to Kaizen events, or targeted efforts to improve the process for greater efficiencies. With a defined roadmap and a detailed project plan, logistics providers can design, simulate and optimize alternative operating models and transportation networks.
Static transportation management solutions cannot drive value over the long term. The key, then, is to determine if a customer’s transportation network is working, make adjustments along the way if it’s not and focus on driving continuous improvements and cost savings. With Lean, this process is repeated over and over again to ensure customers’ networks adapt quickly to change. Customers benefit from optimal inventory positioning, while the end customer enjoys the products they want, when and where they want them.
Value creation forms the foundation of the latest in transportation management. Lean’s ‘Voice of the Customer’ is at the center helping to derive what a higher level of service looks like — one that delivers more savings to the customer while connecting it to a more optimal way to execute sourcing to settlement. Customers want to reduce costs and mitigate risk. They want continuous improvement and transparency.
In summary, customers requiring improved transportation efficiency and reduced overall transportation operating costs both now and in the future should consider transportation services that:
- include a more robust and broader transportation management offering utilizing expanded IT tools and employing extensive Lean management processes and proven operational best practices
- leverage the proven skills and expertise of organizations with extensive transportation management and Lean operating experience
- offer network analysis and solution engineering either coupled with or separate from full capabilities for end-to-end tactical transportation operations management and execution
- can be deployed on a regional or global basis
- can be implemented for individual, discrete transportation management functions or a combination of more comprehensive functions in a customer-designed solution
- can incorporate single or multiple modes of transportation services
- instill a repeatable, standard framework for continuous process improvement and optimization of transportation networks
Customers and shippers are feeling the pressure to cut transportation operating costs without negatively impacting service. To help customers reach this goal, logistics service providers will need to keep up with customer needs, and anticipate those down the road. They will also need to listen to their customers, employ the right talent, have a deep bench of Lean expertise and leverage the best transportation management technology to bring it all together.
Anthony Oliverio is vice president, supply chain services for Menlo Worldwide Logistics. In this role he leads the company’s global Lean strategy, sustainability program and development of business intelligence and standardized business process initiatives with customers. He also is the executive leader for Menlo Transportation Services. He joined Menlo in 1999 and has over 20 years of supply chain experience, having previously worked for FedEx Supply Chain Services and Nordstrom, Inc.
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