Logistics Network Optimization: 4 Core Objectives &  7 Tips to Optimize a Carrier Network

Logistics Network Optimization: 4 Core Objectives &  7 Tips to Optimize a Carrier Network

logistics_network_optimization

As a shipper, it’s essential to have processes that streamline getting your products and goods from point A to point B. Technology has moved businesses forward in creating efficient processes and gaining improved insights into transportation management and freight spend, but are you using these to your fullest advantage? You should utilize technology and larger-scale strategies to streamline the logistics process. An important part of logistics network optimization is creating a carrier network established to meet a shipper’s performance goals.

Carriers can significantly impact shipping costs, customer experience, shipment options, and other factors. Therefore, optimizing a carrier network with the best carriers is a big deal. Without a cohesive and efficient network, you could face numerous challenges, while optimizing creates significant benefits. Read on for four core objectives and seven tips for carrier network optimization.

What is Logistics Network Optimization Focused on Carrier Performance?

When optimizing your logistics network, don’t overlook optimizing your carrier network. An effective way to do this is to utilize data from your shipping activity and invoices. This approach allows your company to create an optimized carrier network to work with the carriers that best suit your needs. These carriers provide the best service based on your KPIs, and you can determine the right carriers by scoring them from your collected data. In addition, you can use the data to see when to expand to new carriers.

Optimizing your carrier network provides benefits like helping you:

  • Better understand and manage carrier accessorial fees.
  • Renegotiate in a more informed way through data-backed decisions.
  • Keep up with market trends and rates.

Why is Optimization of a Shipping Carrier Network Important?

An optimized carrier network allows your business to adapt as unpredictable anomalous events occur within a supply chain. Also, consumers demand more from modern brands, so companies must rise to the challenge to compete in the market. Therefore, shippers must have a well-oiled system and the ability to adapt quickly. This planning and optimization prepare companies for supply chain disruptions, which have become more common with the ever-present challenges of today’s world.

Here are ways optimizing a transportation network is beneficial:

  • Optimizing the shipping carrier network creates a better environment for companies to meet their challenges. The different parts of the supply chain can communicate and work together for better operations.
  • Shippers can better understand when and how to consolidate shipments based on analytics and a full-picture viewpoint. Options include consolidating smaller parcels within LTL shipments or combining parcels into FTL shipments. An optimized carrier network helps you understand how to plan freight movement.
  • An optimized network makes it easier to have specific key performance indicators (KPIs) and see whether you are on track with your goals. Your business can devise quantifiable KPIs to measure the performance and service of various carriers. Such scorecards make it easier to compare carriers and shipment types head-to-head to know whether you are truly getting the best deals and levels of service.
  • Technology makes it easy to obtain data and create relevant reports from it, which you can share with stakeholders. The right technology makes it easy to quickly collect large amounts of data, use it to develop insights, and make data-based decisions.

4 Core Objectives to Optimize your Logistics Shipping Carrier Network

When carrying out carrier-focused logistics optimization, these four objectives can guide your strategy:

1. Figure Out the Best Carriers for Your Unique Needs

Tracking and analyzing data helps you compare shippers, their service, rates and fees, and their shipment types to determine the best choices for your needs.

2. Work With a Combination of Carriers

Your company may determine that it makes the most sense to work with different carriers for unique situations, destinations, and shipment types. Aim to diversify your carrier portfolio to fit each situation. Diversification benefits business processes, costs, and customer experience.

3. Create Data-Backed Strategies

To optimize effectively, use data to inform strategies on zone skipping, footprint redistribution, and other aspects of the network.

4. Plan Out Scenarios

By looking at real-time and historical data, you can carry out dynamic modeling scenarios that give you a better idea of how your strategies will function. You can use technology for this function, incorporating restrictions to hone your forecasting for optimal results and sustainability.

7 Tips to Optimize the Shipping Carrier Network

When you are ready to optimize your carrier network, here are seven tips to guide you:

1. Find New Ways to Grow

Once you know your carrier network’s large role in your company’s finances and level of service, it’s time to determine how to grow in this area. Use data, simulations, and analytics to compare carriers and their services, ship-from locations, modes, and other aspects. The goal is to develop a diverse carrier portfolio that works best for your company and various shipping situations.

In one of our Intelligent Audit use cases, a company realized they were not comparing carriers head-to-head because of hidden fees, and anomaly detection found the source of these cost increases. In addition, our technology can use data analysis to provide true cost comparisons of carriers and services.

2. Strengthen Your Network

Take a look at your carrier relationships and consider new connections to make. The goal is to create a strong network that allows you to streamline logistics in various situations and when encountering disruptions. Use cleansed and normalized data to consider your carrier relationships and determine improvements. Look at options that improve service or rates, such as service, mode shifts, or ship from store options.

We saw the example of a carrier that turned out to be 50 times more expensive for a lane. Machine learning found the problem so the company could find the right carrier solution.

3. Network Assessment

Carry out assessments that tell you how to strengthen the carrier network and create better connections. You can use historical data to conduct analysis and complex modeling that show you the best carriers and methods. The goal is to use data to gain insights and make the best decisions. You can make optimal decisions for network optimization with data, including the option to ship from stores.

In one of our use cases, we found a fee increase and helped the client manage it, but we also partnered with the finance teams to create budget projections that accounted for fee increases.

4. Develop KPIs from the Network Assessment

A thorough network assessment informs the creation of relevant key performance indicators. Determining the best KPIs that are quantifiable and connected to your goals improves your chances of reaching goals and measuring success. KPIs enable your company to keep track of performance and continue to improve.

5. Significant Savings

Correctly optimizing the carrier network provides the major benefit of creating cost savings. It can help your company save significantly by carrying out apples-to-apples carrier cost comparisons, being aware of fees, finding the best shipping methods for all situations, and more. On average, shippers save 12 to 18 percent using Intelligent Audit’s network optimization services.

In one of our use cases, anomaly detection found fees responsible for shipment cost spikes up to 250 percent. Discovering the problem solved this cost increase to create savings.

In another case, human error in entering shipment weight significantly increased the shipping cost. Anomaly detection found the source of the problem, allowing the company to manage the excess costs and create a new preemptive system to prevent a repeat.

6. Expand with New Connections

Work on building stronger relationships with current carriers and develop solid new carrier relationships. Both create a more robust, better carrier network. A diverse portfolio of carriers allows you to shift and adapt to all situations to provide next-level business services. You can take numerous steps to create and improve relationships, including a faster carrier payment system, an auto-audit system for invoices to catch and address problems, and following industry trends.

7. Streamline and Optimize with Modern Tools

Use technology like machine learning to utilize data and make the best decisions for optimizing your carrier network. Cutting-edge technology also helps your business manage back-office aspects, such as finances and accounting, to streamline your processes. Intelligent Audit offers leading machine learning software to create streamlined logistics.

We helped one company discover new accessorial charges due to a carrier service change. Our machine learning technology found the problem, and our account managers helped the company develop an action plan in response. A similar use case involved a new accessorial fee for excess mileage. In this case, the fee was a mistake that the carrier fixed. In both cases, advanced technology found the source of a financial problem and guided the company forward.

Intelligent Audit: A Partner Who Understands Logistics Optimization Begins with Data

True logistics optimization must focus on shipping carrier optimization—your company’s ability to build and maintain a strong competitive advantage might depend very well. More than ever, carriers play a significant role in your success. That’s why Intelligent Audit, a global leader in providing business intelligence and analytics, offered you four core objectives to optimize your logistics shipping carrier network and seven tips to help guide your efforts. It’s no secret that data you already have but can’t access holds the key to success. Let us show you more. Contact us today to learn how we help companies across industries uncover cost reduction and supply chain improvement opportunities.

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