From late and disrupted deliveries to goods delivered in an unacceptable condition and poor customer service, these are just some of the complaints leveled at parcel carriers. As demand for parcel delivery surges, it seems the criticism increases too. With peak season fast approaching, the pressure is on carriers to improve performance. With some reputations taking a bigger hit than others, the phrase ‘don’t put all your packages in one truck’ comes to mind.
What’s becoming more apparent to shippers is that reliance on a single carrier is risky. That’s why leveraging logistics network optimization is the way forward. Shippers looking to minimize the risk of partnering with poor-performing carriers are increasingly turning to logistics network optimization to carve a path to carrier diversification and maximum carrier efficiency.
Low-Performing Carriers Come With Steep Costs
Optimizing carrier selection helps shippers avoid the consequences that come with low-performing carriers, which include:
- Inefficient operations and delays – Shippers who can’t rely on their carriers often must allocate more resources to manage shipping-related issues, like tracking packages, dealing with customer complaints, and processing returns. This can lead to operational inefficiencies, increased costs, and delays.
- Increased shipping costs and budget overruns – Although poor-performing carriers might offer lower upfront shipping rates, their inefficiencies can lead to hidden costs, resulting in budget overruns. Equally, shippers might have to bear the cost of reshipping items or refunding customers if a carrier frequently loses packages.
- Customer dissatisfaction due to service issues – Delays and poor customer service attributable to subpar carriers can impact the customer experience. Dissatisfied customers are more likely to leave negative business reviews, seek refunds, or choose competitors for future purchases.
- Risk of disrupted supply chains during crises – Low-performing carriers can further compound supply chain disruptions. Late delivery of crucial components or products can lead to production delays. For example, a manufacturing company relying on a carrier that frequently delivers raw materials late often experiences production bottlenecks.
- Difficulty adapting to changing business needs – Poor-performing carriers tend to have rigid and inefficient operational processes. They often lack the agility to adjust to the changing needs of the shippers they serve. For example, they might struggle to adapt quickly to an increase in shipment volumes.
- Limited scalability and growth potential – A carrier who has difficulties adapting to changing business needs can hinder the scalability and growth potential of the businesses they serve. If a shipper experiences a sudden spike in demand during peak season, a low-performing carrier may struggle to scale up its operations to meet the increased demand.
Logistics Network Optimization and Carrier Efficiency: The Basics
Logistics network optimization is the strategic process of designing, analyzing, and refining supply chain and distribution networks. This maximizes efficiency and minimizes costs while meeting customer service objectives.
Everything from the location of warehouses and distribution centers to the planning of transportation routes and inventory levels needs logistics network optimization.
The key to effective logistics optimization is to leverage technology for data analysis and real-time visibility, which can significantly improve carrier efficiency. This ensures that shippers select a diversified carrier mix that optimally suits their operations and minimizes risks.
On a bigger scale, the role of optimization in carrier efficiency can be defined by the following:
- Route optimization: By strategically designing transportation routes within a logistics network, shippers can minimize the distance carriers need to travel, reduce fuel consumption, and decrease transportation costs. This optimization ensures that carriers operate on the most efficient routes, which positively impacts their efficiency.
- Load consolidation: Logistics network optimization enables shippers to consolidate multiple shipments into one load. This reduces the number of trips carriers need to make and minimizes empty return trips, detours, and delays while maximizing their load capacity, leading to more efficient operations.
- Carrier selection: Network optimization helps in selecting the right carriers for specific routes and regions based on factors like service quality, geographic reach, and pricing, aligning them with a shipper's specific needs and objectives. This ensures that carriers are matched with routes where they can operate most efficiently.
- Real-time visibility: Through integrating technology and data analytics, network optimization provides real-time visibility into the status of shipments. Carriers can access accurate and up-to-date information about deliveries, reducing the risk of delays and enhancing their efficiency in managing their schedules.
- Inventory management: Efficient logistics network optimization involves optimizing inventory levels at various locations within the network. This ensures that products are strategically positioned to meet demand, reducing the need for rush shipments and minimizing the burden on carriers.
- Dynamic scheduling: Network optimization enables dynamic scheduling that adapts to real-time changes, such as weather, traffic, or order priorities. Carriers can receive updated schedules and routes, allowing them to respond flexibly and efficiently to unexpected circumstances.
- Performance metrics: Optimization processes include setting key performance indicators (KPIs) to measure carrier efficiency and performance. By continuously monitoring these metrics, companies can identify areas for improvement and work collaboratively with carriers to enhance their efficiency.
- Cost reduction: One of the primary objectives of logistics network optimization is to reduce overall supply chain costs. Companies can negotiate better rates with carriers by achieving cost savings in areas like transportation, inventory, and warehousing, which benefits both parties.
- Freight auditing: Logistics network optimization that includes freight auditing helps to improve carrier efficiency by promoting accuracy, transparency, and accountability. Billing accuracy, rate validation, service level verification, data accuracy, and more are some areas that can improve carrier efficiency when making freight auditing part of a logistics network optimization strategy.
The need for logistics network optimization is clear, but that doesn’t mean it’s without its misconceptions, some of which include:
- One-size-fits-all: The requirements of every shipper are unique. The belief that a single strategy suits all logistics networks is false. Shippers should not neglect the need for customization to ensure they get the best logistics network optimization solutions for their needs.
- Complexity: Logistics network optimization is often misunderstood to be overly intricate. The opposite is true. It works to streamline supply chains using modern tools to simplify management and operations.
- Costly: Compared to the cost savings, any initial cost outlay is offset by the return on investment that comes with optimizing a logistics network. It’s a common misconception that the process is expensive because technology is involved when, in fact, modern tools remove many manual processes that cost shippers more.
- Time-consuming: The idea that logistics network optimization is time-consuming is another misconception. Again, the opposite is true. It gives shippers time back by removing mundane manual processes to enhance efficiency.
- Short-term: Logistics network optimization is a long-term strategy, not a short-term fix for meeting immediate goals — even though some shippers are under this impression. Most importantly, network optimization is a sustainable practice that gives shippers a strategic focus. This contributes to long-term cost savings, operational excellence, customer satisfaction, and increased competitiveness.
Leveraging Tech-Enabled Optimization Strategies For Maximum Carrier Efficiency
Streamlined carrier diversification is the practice of efficiently managing and optimizing a diverse carrier network. With modern logistics suffering single-carrier dependency, carrier diversification solves this problem by using multiple shipping providers. This boosts supply chain resilience and adaptability.
Logistics network optimization simplifies carrier diversification by leveraging tech-enabled strategies to drive maximum carrier efficiencies. Here are some top tech tips, specifically logistics optimization software, to implement to achieve an effective and diversified carrier network.
- Transport Management Systems, which help to optimize carrier selection by using algorithms to find the most efficient carriers and routes.
- Data analytics and reporting tools can be used to analyze the performance of your current carrier network to identify trends and opportunities for improvement. A data-driven approach helps you make informed decisions about which carriers to work with.
- Real-time visibility platforms give your business and carrier network up-to-date information on shipments.
- Freight auditing software can be integrated with a host of other technologies to achieve an effective and diversified carrier network. For example, you can implement carrier scorecards with a freight auditing system to measure and compare carrier performance. Scorecards can be customized to align with your specific criteria and priorities, making it easier to evaluate carriers for diversification.
These are just a handful of tech solutions available for logistics network optimization that will put you on the path to achieving an effective and diversified carrier network.
For Smart Shippers, Logistics Network Optimization Offers Powerful Benefits
The value of logistics network optimization is proving to be a game-changer for shippers while encouraging carriers to up their game. For smart shippers, the key benefits include:
1. Cost Savings
Optimization ensures partnerships with carriers that help to reduce operational costs through efficient routing, load consolidation, and inventory management, resulting in significant savings.
2. Enhanced Service Levels
By streamlining processes and improving transportation efficiency, logistics network optimization ensures consistent and reliable service delivery using carriers you can trust.
3. Improved Customer Satisfaction
Logistics network optimization helps identify carriers offering faster delivery, fewer errors, and better communication to enhance the customer experience, leading to higher satisfaction levels.
Leveraging Logistics Network Optimization Is The Way Forward
The parcel delivery market is in chaos. Rising complaints against carriers serve to prove this, making the need for businesses to leverage logistics network optimization for improved carrier efficiency all the more crucial. Logistics network optimization is no longer a luxury; it’s necessary to protect against chaos.
As the need for logistics network optimization grows, specialist guidance becomes invaluable. Intelligent Audit stands at the forefront, offering specialized solutions.
With services ranging from freight audit software to real-time visibility, they assist shippers in cultivating a balanced, resilient carrier portfolio, ensuring that businesses are ready for whatever comes their way.