We’re all familiar with the problem of silos within organizations and how unproductive they can be to the company as a whole. But have you thought about how the same thing tends to happen with your transportation operations? Can you truly claim to have “one-stop shopping” across all locations, carriers, modes, fleets and parcel? If you have separate “buckets” for any of these, you’re spilling cost savings all over the place.
While we all might agree that a “single version of the truth” is as important for transportation operations as for other parts of the business, there are two things working against this happening – history and after-thought. Historically, transportation operations grew up with the business; new locations, new product lines, new markets led to pockets of transportation popping up to serve those functions. Worse yet, back when manufacturing was king, transportation was an after-thought – just a cost you had to incur to get product to market. As a result, cherished principals of business management such as economies of scale, centralized planning, and flow optimization, and the cost savings they create, were not applied to transportation.
Into the fray came first-generation transportation management systems (TMS). They automated the pockets of transportation to make them more efficient – consolidating loads, selecting modes, managing carriers, and choosing the best rates. If you owned or managed a dedicated fleet, you might deploy a fleet management system. When the number of parcel shipments increased, you may have used a parcel system. And later on you possibly added a freight payment system or outsourced this function. These systems allowed centralized planning and execution, improved efficiency, and helped ensure lowest rate shipments and proper payments. But they were still silos of optimization with savings confined to the areas they addressed.
Then along comes the consumer economy and all-channel commerce. Parcel shipments are sky-rocketing. Delivery windows are shortening. Meeting customer expectations is becoming a lot harder. And we’re not just talking about retailers. Any company that has a website or contact center where customers can order products (B2B or B2C) is impacted. Suddenly, those silos of optimization don’t work anymore. Customers want to know where their order is regardless of how you’ve chosen to fulfill and ship it. The CFO wants to know why your freight costs have gone through the roof from all those parcel shipments.
The only way to meet the expectations of your customers and the CFO in this new consumer-driven world is to break down the operational silos and “buckets” of transportation optimization. The solution is today’s advanced transportation management systems that can optimize all aspects of your transportation simultaneously. No more silos. No more sub-optimization. No more blinders.
After all, what you want is superior customer service at the lowest possible cost. You shouldn’t have to worry about whether it’s multi-leg shipments from overseas, intermodal shipments across country, or last-mile shipments to the customer’s door. The system should figure out the most economical modes, routes and carriers that meet customer delivery windows, whether that means using common carriers, your own fleet, or combining parcels into LTL shipments using pool points or zone-skipping.
So what does pulling all aspects of your transportation spend into a single optimization engine buy you? No more “spilled” savings from the right hand not knowing what the left hand is doing. A single view for you and your customers to know where their orders and shipments are at all times. A single database of transportation information for more intelligent analysis and decision-making. And perhaps most importantly, happy customers and a happy CFO.
Let’s face it, the world of transportation management has become a lot more complicated. You need the right tools to help you handle it. After all, who wants to clean up spilled buckets?
Jim LeTart has over 30 years of sales and marketing experience in the systems technology field. He has spoken at numerous national and regional trade events and his work has been published in many industry publications. For the past 11+ years Jim has been Director of Marketing for RedPrairie, where he has responsibility for industry marketing, analyst relations and association partnerships. Jim has an Industrial Engineering degree from Marquette University and an MBA from the University of Michigan.