carrier management Archives

Getting (Even) More from Your Transportation Management Solution

Supply Chain Optimization | By Chris Jones • 12/08/2016

Getting benefits from a modern transportation management solution that has just gone live is just the first wave of value available. There’s a lot more that can be gained when companies recognize that transportation management solutions are more than execution systems. With the ability to model alternate scenarios, logistics organizations can more accurately model the benefits and challenges of proposed changes to transportation strategies and processes, and continue to enhance the business value they receive from their transportation management solution.

Scenario Modelling
Somewhere in the last 20 years, the term supply chain execution got created and transportation management solutions got dropped into that category. However, modern transportation management solutions have robust planning capability and the ability to optimize a broad spectrum of transportation scenarios. While optimizing day-to-day transportation requirements is important, this same capability can be used to evaluate alternative transportation management strategies and processes to determine more cost-effective and better ways to operate and serve customers. Modern transportation management solutions are critical to solving tactical, and even strategic, logistics challenges.

You Already Have Most of the Data
Ironically, the execution aspects of transportation management allow logistics organizations to capture the transactions that occur in the daily transportation processes and are needed for planning scenarios. This operational data enables the logistics organization to establish and validate baseline models and performance needed to correctly evaluate the impact of alternate scenarios. While alternate scenarios are based upon hypothetical assumptions (e.g. what if I changed my carrier contract structure?), the models are using actual order information and business constraints, and have real results that can be matched to the scenarios. This approach makes the assessment process more concrete and objective, and minimizes risk to achieving the value when deployed.

Key Scenarios to Assess
There are a lot of factors that determine where best to start, but the ones that can be implemented without structural changes to the transportation network produce the fastest results. Here are five areas where transportation scenario modelling can produce great results.

Rates and carriers: Changes in freight mix, carriers used in the market and their rates provide excellent and ongoing transportation opportunity scenarios. These potential changes can be readily evaluated to determine the best structure or combination of structures, what structure should be put into bids, when to add or subtract carriers, and when to lower costs or get better service for the same spend.
Consolidation rules: Assumptions about consolidation rules can change after getting a better understanding of historical freight mix and forecasted demand. Optimization scenarios allow logistics organizations to evaluate changes to their consolidation rules before putting them into effect. For example, what is the cost reduction opportunity to consolidate deliveries across days in a service region (e.g. make deliveries 2 days per week instead of 5 days) and what will be the impact on customer service?
Process changes: Changes in technology and relationships between shippers and carriers provide plenty of opportunities to streamline and create greater flexibility in transportation management. A close examination of how current processes are used (or abused) will show how those processes and solutions can be reconfigured and simulated to evaluate their impact on transportation responsiveness and flexibility.
New customer service and delivery models: Transportation has become a critical factor in the customer’s overall experience. Whether selling to consumers or B2B, concepts like same/next-day delivery and value-added services are now important parts of transportation management. Rapidly modelling and assessing new transportation services models and their costs are part of leading companies’ competitive differentiation, revenue growth and profitability strategies. These new strategies need to be evaluated as part of the overall transportation solution to leverage economies of scale and ensure a consistent customer experience.
Suppliers and Distribution Locations: With changing sales and delivery models, assessing where your suppliers are and their capabilities in conjunction with your distribution locations can also be scenarios to analyze. Working with your suppliers on drop-ship programs and reviewing the right order profiles (frequency & size) can improve both costs and customer service. Assessing the locations and product mix in your DCs can also highlight opportunities. This might include more consistent product inventory across DCs (or the reverse), using retail locations for same day or next day delivery, or leveraging a 3PL for specialized products or areas that do not yet warrant your own facility. Each of these has implications on your transportation network and can be analyzed.

Got to Have Expert Talent and Time
Obviously, there is a whole new level of value that can be unlocked – if you have competent resources and time to do it. Without solid domain expertise and thorough knowledge of your transportation management solution, the proper level of analysis will not happen and the right scenarios won’t be built. Defining the problem/opportunity is the most critical task. Having the time to conduct the analysis to get there is equally important. If your transportation planners are spending their entire day building loads, executing shipments and fighting fires, they’re not planners, they’re dispatchers. Leading transportation organizations carve out more than half of each day for their planners to work on improvement programs and new business models. Encouraging more strategic analysis across the supply chain, operations, and procurement teams can unlock strategic transportation opportunities and facilitate adoption.

Transportation management is dynamic and so are modern transportation management solutions. Logistics organizations need to understand that transportation strategies and processes should be regularly evaluated and optimized to enhance their value to the company. Modern transportation management solutions provide a great platform to analyze and realistically evaluate those changes. It only takes resources to deliver the results. How is your organization using its transportation management solution to extend its value to the enterprise? Let me know.

As Executive Vice President, Marketing and Services, Chris Jones <CJones@descartes.com> is primarily responsible for Descartes marketing activities and implementation of Descartes’ solutions. Chris has over 30 years of experience in the supply chain market, including the last 10 years as a part of the Descartes leadership team. Prior to Descartes, he has held a variety of senior management positions in other organizations including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group and Associate Director Operations & Technology for Kraft Foods.

Good to the Last Mile

Guest Commentary | By Bryan Wyatt • 10/20/2016

The term “last mile” originated outside our industry. In fact, it comes from the telecommunications industry and refers to the installation and delivery of communication services to the end client.

In the realm of transportation, though, last-mile delivery means the item’s final destination in the supply chain (for ecommerce deliveries, that mostly means to the customer’s home or sometimes office).

In the early days of ecommerce, customers simply expected to order parcel-size items online. But with today’s ecommerce boom, they expect to be able to order anything online—from shoes and clothes to a new dishwasher or that shiny new riding lawn mower they’ve been dreaming of. Now, their shipping expectations extend far beyond what items they can buy, to shipping costs and also how and when their goods will be delivered.

Why It’s Important to Establish a Best-in-Class Last-Mile Operation with the Right Carriers
Only a few years ago, online small package orders were limited to what the U.S. Postal Service, UPS, or FedEx could handle. With large or over-sized item shipments, the best a customer could hope for was that the shipper sent the item to the store closest to them. Then, the customer would have to figure out how to get the item from the store to their home, across the threshold, and then into a garage or in-home area.

With new white-glove delivery and in-home set-up or installation options included in last-mile delivery these days, the ongoing last-mile irony gets even more complicated. Last-mile delivery has the very same logistical challenges it did years ago: finding the best way to transport a large item, unload it from a truck, and get it to the final destination.

Only now, the last-mile delivery onus is on the retailer, including scheduling delivery at a time when the customer is at home and having the product delivered at the cheapest cost possible, often for “free.”

Given the operational and financial constraints for retailers, it’s imperative to optimize last-mile delivery. To succeed, we advise that retailers start by selecting the right carrier for the job.

You’ll want to start the process by first matching your freight demands to the carrier or carriers who can manage your last-mile deliveries effectively. But selecting the right carrier goes beyond finding a company that can properly transport the freight. Your carrier will need to handle it the same way you would if delivering via your own private or branded fleet, to ensure you retain customers as well as protect your company’s reputation and brand.

Keep in mind that that the carrier’s driver is the last person your customer interacts with before the transaction is complete. The customer experience with that carrier’s driver leaves a lasting impression. What’s more, social media pretty much guarantees dissatisfied clients will share any negative experience with a whole multitude of existing and potential customers. You’ll need to think first about how you need the freight delivered and what additional services your customers are expecting, which can vary enormously. For example:

If you are a retailer selling faucets, do you offer installation services? If so, this requires far more than successful delivery; you’ll need to schedule a qualified installer, which requires multi-step coordination with the arrival of the technician–all while considering customer availability. In this case, the shipper would track the delivery of the parcel to the installer, not to the customer. Then once the package arrived, the installer would arrive at the customer’s home at a predetermined time and day with the faucet. While there, they would install the new faucet.
What if you are selling riding lawn mowers? These products can’t be moved through a traditional parcel network; the shipment requires a more hands-on approach, like one provided by a home delivery carrier that specializes in large equipment. In this case, you need a carrier who can not only handle large items efficiently through their network but also deliver to a variety of customers’ homes via a lift gate on the back of the truck and most likely has a pallet jack to move the item around. Additionally, the driver may need to be trained to address questions–or even start the mower or provide a product demonstration–to reassure the customer the product is in proper working order.

When selecting a carrier, it’s important to think not only about the current requirements for your freight, but also future customers’ expectations and requirements.

At the same time, it’s important to take a step back and be honest with ourselves—we can’t anticipate everything. What’s more critical is developing a solid partnership with one or more reliable carriers who will provide continuous feedback so you’re aware of changing customer demands.

Your carrier needs to be agile and provide services on-site as the customer requests them. And you’ll need to give them the flexibility to charge for those extra services to keep customers happy. A driver that says, “we don’t do that” is a sure step to losing future sales. In many cases, carriers are already providing extra services to keep customers happy. However, expecting carriers to continue to absorb these costs is short sighted. As an industry, we expect a transfer of these charges to the shipper, either through increased base rates or new accessorial charges. As this shift occurs, shippers must be able to trust their carriers and be confident they will not abuse the arrangement by charging for services not rendered.

Last-mile delivery is constantly evolving. Only by partnering can shippers and carriers build the right infrastructure for the future.

I’ll be writing more about optimizing last-mile strategies in future blogs and articles–addressing the different transportation modes common to last-mile delivery and the operational challenges each presents.

A senior manager in the Chainalytics’ Transportation competency, Bryan Wyatt has over 20 years of experience and expertise in transportation operations, strategic sourcing, data analysis and logistics planning, as well as logistics/supply chain change management.

Supplier Relationship Management Functionality Comes to TMS

Transportation Management Systems | By Steve Banker • 09/16/2013

I was invited to the MercuryGate user conference this year. MercuryGate is a SaaS provider of transportation management systems (and a Logistics Viewpoints sponsor). What most struck me was an application the company calls Carma (Carrier Management). Carma has been out for a few years, but I had never done a deep dive on it. This, I believe, is differentiated functionality; I’m not aware of any other transportation management system (TMS) with similar functionality.

TMS solutions have been getting broader and deeper for years. But Carma strikes me as a Supplier Relationship Management (SRM) solution for the transportation function, with carriers being analogous to the suppliers SRM solutions focus on. In ERP, procurement solutions broadened out to include SRM capabilities. Here is how Wikipedia defines SRM: “The systematic, enterprise-wide assessment of suppliers’ assets and capabilities with respect to overall business strategy, determination of what activities to engage in with different suppliers, and planning and execution of all interactions with suppliers, in a coordinated fashion across the relationship life cycle, to maximize the value realized through those interactions.” Within TMS, with Carma, we are seeing the same progression.

Carma is a tool for carrier qualification, monitoring, reporting and, ultimately, risk mitigation. If a shipper, broker, or non-asset based Logistics Service Provider (LSP) uses unqualified, unsafe carriers, they can be liable if the carrier causes an accident under a legal doctrine known as “Vicarious Liability.”

Carma is a tool that enforces a carrier qualification processes. The way the process typically works is that when a load planner needs to find a carrier for an uncovered lane, or when incumbent carriers do not accept a load, the planner goes into the system to see if the carrier he wants to use is approved. If the carrier is not approved, there may be a note explaining why this is, for example, insufficient insurance.

If the carrier is not in the system, the planner requests permission to use a new carrier. Carma speeds up the process of getting a carrier approved. Carma then generates a carrier packet and automates communication with the carrier. Because Carma is integrated with TransCore’s CarrierWatch and other third party carrier information providers (RMIS, Carrier 411), much of the required information can be automatically populated. Information like whether the Federal Motor Carrier Safety Administration (FMSCA) has certified the carrier, how much insurance the carrier has and when it is expiring, and FMSCA safety scores can flow into the carrier packet. If a carrier is denied approval, reason codes explain why.

For existing carriers, the system knows when key events occur, for example, a carrier’s insurance will expire in ten days, and alerts the carrier management team to the event as well as automatically emailing the carrier every night until the new information is received.

The data fields, and rules for what constitutes a qualified carrier, are customizable. Shanon Hart, a VP at MercuryGate who is the product manager for Carma, told me that some of their customers have chosen not to use the BASIC scores because they think it may actually increase their liability in the event of an accident.

There are different levels of carrier qualification approvals that are possible. For example, a shipper’s carrier may be qualified for most loads; however, there may be loads with certain characteristics (like HazMat) for which they are not qualified. Or if it is a 3PL, Carma can respect the different carrier qualification rules that different shipper customers may have in place.

Once a carrier responds and is qualified, Carma then helps to enforce the use of qualified carriers and provides an audit trail. So if a planner tenders to a non-approved carrier, the system can tell you which planner did this. If carrier data is changed in the system, an audit trail tells you who made the change and when it was made.

The carrier qualification process is a form of risk mitigation that every company that ships freight should do, but of course not everyone does. Most companies that do engage in this process use spreadsheets or Access databases. The disadvantage of this manual process is that it is slow, cumbersome, and lacks proper enforcement.

This solution is clearly a step forward for TMS. Shanon tells me that MercuryGate’s new clients clearly see the value, and almost all of their new TMS customers choose to implement Carma.

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