The transportation environment is getting difficult for shippers once again. As we’ve outlined in previous posts, capacity constraints and driver shortages are impacting rates across the board. Cass is reporting a 5.5% increase year over year versus this time last year. Shippers always have the option to continue to work their carrier relationships in hopes to stave off cost and service impacts, but many are realizing that their organization has reached an inflection point and they need to be innovative in their response to the pressures of today to survive tomorrow.
Many in the transportation industry are quick to point to regulatory environments as the main issue for capacity constraints, with both shippers and carriers wanting relief from recent HOS rules and FMCSA processes. Although these two issues have placed increased scrutiny on trucking as a whole, shippers have their own set of pressures. Shippers are continually finding the complexities of getting a product to market to be a large challenge, with high demands from consumers. The “Amazon Effect” has driven many retailers and stores to try and follow suit, thereby putting pressure for faster turns and increased flexibility in an already complex supply chain. Some shippers have found that mergers and acquisitions have required them to evaluate the design of their supply chains. This business challenge creates additional complexities, as well. Finding truly innovation solutions is the only way to tackle issues this big.
A leading food supplier faced some of these exact issues, needing to manage a temperature-controlled distribution network while incorporating multiple acquisitions each year. Without visibility to internal and external transportation issues, things could have fallen apart quickly. By getting ahead of the curve and investing in modern SaaS-based TMS technology, the company created a single source for transportation management. This single platform and database allowed the company to effectively on-board new acquisitions. This meant a smoother scaling of the supply chain, integrating the new locations and product lines. As the company progressed, it found that its decision to implement a full managed transportation service allowed it to drive even greater cost savings through the supply chain, using its partners as an extension of its operations, rather than as just a facilitator. By starting with technology, innovation naturally became part of the supply chain solution.
Notice that the issues presented in this case study were similar to many shippers. The difference was in the approach the company took to tackle the issues. Instead of trying to integrate multiple systems, it consolidated the different systems into one system. The consolidated SaaS platform opened up innovative ways to produce a quick ROI; unlocking additional rate savings, productivity gains, and even IT infrastructure savings. Additionally, value-added services and aggregated data helped reduce empty miles and optimize the company’s supply chain network. All these options come from focusing on innovating, rather than just fixing the individual problem.
Innovation might seem like a big task for shippers when faced with so many diverse problems that don’t appear to be going away anytime soon. But can they rely only on internal expertise to address an evolving landscape? Without collaborative innovation, execution becomes a difficult, time-consuming process that isn’t repeatable or efficient. Issues arise, leading to handling exception after exception. By stepping back from fire-fighting and looking at the supply chain issues in aggregate, a company can find solutions that reveal alternative answers to traditional problems. So let’s rethink how we approach today’s issues, not trying to find a single answer, but to find a fully innovative solution.
Chris Timmer is SVP of Marketing & Strategy at LeanLogistics. Chris is responsible for overall strategy and positioning of the LeanLogistics solutions. Chris has over 20 years of experience in transportation and logistics management and has been recognized as a leader in the SaaS solution space.