Transportation network optimization is a leading goal for supply chains around the globe. As noted by Deloitte, "Global supply chains can be planned with great precision. However, unpredictable environments and rising consumer demands require unprecedented efficiency and agility to react to changing network conditions with dynamic decisions. Industry 4.0 technologies are creating new opportunities to digitalize the value chain and create sources of insight and opportunities to optimize networks in real-time." That risk of something adverse occurring — a disruption — continues to drive investments of time and resources into more informed decision-making and leveraging logistics analytics. However, the decision to implement analytics is only one part of the solution. And it's important to not overlook four additional critical considerations to strategic and tactical optimization.
Sharing information is an absolute necessity in today's supply chain. The finance department needs to know what's happening within transportation and how that impacts costs and capacity to improve transportation spend management performance. Ultimately, a failure of communications will lead to dissatisfied stakeholders and could result in adverse working conditions. While everyone wants to do more with less, it's critical to share information freely within your organization and keep everyone in the loop.
Another opportunity for transportation network optimization rests with shipment consolidation. Parcels are everywhere and growing in volume, especially with the unprecedented growth of e-commerce in the past year. As such, consolidation opportunities exist by combining parcels into LTL and LTL into FT. Of course, that's possible only if a company can visualize the full movement of freight and know when it makes sense, financially and strategically, to take those steps. For example, shippers can turn to transportation analytics platforms to know when to consolidate, using technology to create "what if" based scenarios to visualize the financial and service impact expected when implementing these strategies.
The next key to transportation network optimization rests with performance metrics. Performance metrics, or key performance indicators (KPIs) are quantifiable values to track the service level and ability to fulfill obligations across your network partners. For example, a carrier scorecard that measures performance can help you realize when your company is incurring a higher rate of invoice errors. Further, data normalization has the ability to cut down on all the noise to uncover a true comparison between carriers, services lanes, and related fees. At the end of the day, normalizing data to compare apples to apples across modes and shipping activity will give leaders a clearer view of true performance and make changes in their transportation network to further optimize results.
Technically, the final step is contained within the first step as detailed above. Stakeholders need to know what's happening within the transportation network. Their involvement, however, should be contained to the most meaningful reports and data analytics, not raw data. The same is true of all individuals within your network. But shareholders should have access to the most widespread view of data analytics and be able to act upon them easily. That's where having an advanced dashboard and being able to identify the cheapest transportation opportunities will add value. Sharable reports and dashboards with real time data allow more data-driven collaboration across the different business units, creating a culture of continuous improvement across the organization.
There are some things that all companies know are critical to logistics optimization, such as using a digital system to manage transportation and communicate with carriers. And it's easy to assume freight bill auditing and payment can be kept in-house successfully. While theoretically true, your team needs to focus on what it does best — meeting customer expectations. By outsourcing the full process and tapping the potential of integrated network performance measurement with analytics, it enables a win-win outcome for everyone. Contact Intelligent Audit to get started.
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