Actionable analytics and meaningful logistics intelligence are essential elements in freight. Actionable analytics gather large volumes of data and interpret it in a meaningful way, translating it into effective business strategies. As a result, shippers can better manage their total transportation spending and make the best decisions for their organizations.
Since logistics intelligence sources data directly from freight systems in real-time, filling in the gap between your real-world logistics and your supply chain management strategies, it becomes easier to use that information strategically. Furthermore, companies that ship multiple modes and at a large volume need to consider where the data comes from and how it enables transportation optimization. In other words, it's time to understand a few things about what's happening and how data provides the answer.
What's Happening: Shipping Disruptions Continue
While businesses are experiencing labor shortages, there is a disruption in both the production and supply networks, hampering economic growth and product and service shortages for consumers. Changing customer expectations are happening, too. Winter weather is causing travel issues, such as automobiles slowed by wet surfaces, high winds stalling delivery trucks, ice and snow causing trains to stall, impacting freight. Constant disruptions aren't anything new.
The culmination of higher fuel costs, higher transportation rates, and the uncertainty of manufacturers' access to raw materials will make figuring out transportation management challenging, pushing the need for logistics intelligence even higher. Also, there's the continuing pressure from more ocean imports and congestion at major thoroughfares to consider.
According to JOC.com, "the New York and New Jersey port backlog is increasing and leading to more instability in terms of product replenishment and inventory management in the weeks after Christmas. Those insights are valuable for planning for the next peak, especially if the Omnicron variant continues on its march forward. "
Freight shipping costs are climbing. A simple 10% mistake on a single shipment might not have been a colossal error in the past. But imagine this reality: With ocean freight costs setting records, those same errors are now increasingly harmful to budget and bottomline performance. That simple 10% error has scaled to a 40% increase of erroneous costs, and shippers need to understand what this means for transportation spending and how it tracks back to the need for data-driven management. The mode of transportation, the weight of the cargo, and the distance to its delivery point need to be factored in with the cost.
Shipping disruptions are continuing at a record pace. E-commerce is up, and there is the continuing threat of additional COVID-19 variants. Each risk presents the possibility for a delay despite growth. For instance, shippers might have e-commerce demand growing every day. As reported by Tech Crunch, "Thanks to a combination of faster internet, the boom in live video, and the rise of influencers, live shopping is becoming a major (if not a primary) channel for avid shoppers." In this instance, live shopping meaning the ability see real-time inventory and make decisions to purchase, pickup or have an order delivered. Still, demand means minor disruptions can quickly scale into more significant problems. Fortunately, shippers can overcome these issues by following these steps:
- Offer More Payment and Shipping Options. Adding such features would increase the already booming online shopping by giving customers more payment options.
- Provide Discounts on Worthy Purchases. Essential items that consumers buy daily are worthy purchases and should be eligible for discounts; senior-citizen discounts should also be applied to keep satisfied customers coming back. By accounting for errors in input, which may increase shipping cost per package, shippers can better know when to increase shipping rates to maintain cost control.
- Diversify Your Transportation Network With 3PLs. Third-party logistics providers (3PLs) can help run a better business shipping strategy. 3PLs have proven high performances and come at a lower market cost to shippers than building in-house resources.
- Take Advantage of Zone Skipping to Leverage Ground Where Possible. Remember that ground shipping can take one to five business days when shipping small parcels; air shipping is simply more expensive. Yet, many parcels only need to arrive in a time frame comparable to ground transportation. This is the basis of zone skipping, but not all air parcels can go by ground and still arrive on time. As a result, it's vital to track data to know when to use ground over the air, effectively skipping zones without impacting total costs.
- Track the Performance of Your Transportation Network Partners. Shippers should track on-time delivery rates, cancellations, fall-offs, delayed shipments, and carrier compliance around the clock. Such logistics intelligence metrics help identify underperforming carriers that are more likely to disrupt transportation strategies.
- Know When to Reinitiate RFPs to Get Better Shipping Costs. Annual contracts can become harbingers of higher costs and limited capacity in times of disruption. However, shippers still need such agreements to create a great relationship with account managers from preferred carriers. Simultaneously, they must look for hidden fees/surcharges, quote shipments across multiple shipping carriers before agreeing on shipping rates, and track it all. That information can further help shippers identify when to reinitiate RFPs, including mini-bids to secure guaranteed, short-term capacity at the right rates.
- Implement Vendor Compliance Programs. Vendor compliance must be a priority in supply chain management. Compliance will lead directly to increased customer satisfaction, faster order processing, reduced carrying costs in warehousing, and freight spend savings throughout all supply chain management activities.
- Reduce Dock and Yard Congestion Through Data-Backed Scheduling. Sharing real-time GPS data helps shippers better track and manage deliveries, and when paired with your scheduling platform, it will reduce congestion when loading/unloading trucks. Still, it relies on top-notch logistics intelligence to work.
- Leverage Secure Payment Processes for Carriers. Carriers have always endured the uncertainty of lengthy or unsecured freight payments. Securing payment often involves a lengthy process with several steps. The key is to rely on a single source of logistics intelligence to guide all payments and complete them through a secure platform to ensure you're only paying for what's due while eliminating any late payment fees
Even with these steps in hand, there are ample risks to consider that may undermine operational efficiency. Remember that businesses must navigate the challenges of COVID-19 while maintaining operational efficiency. Yet, they still run the risk of overspending with every change made by their carriers, and those problems worsen with legacy technology.
Where Legacy Technology Falls Short
Legacy technology in freight might work for a short period, but it's rapidly becoming insufficient in today's age. The world of freight mandates instant access to information and the ability to act on that information immediately. Still, some organizations have forgone upgrading and integrating their technology stacks. Unfortunately, relying on outdated technology in supply chain management may lead to several issues, including:
- Inability to share real-time data. This will affect the navigation and tracking process, and it may actually lead customers to assume a late delivery will occur, resulting in a higher risk of returns.
- Poor traceability of freight. Knowing that there is a problem immediately will save a significant amount of time for drivers, customers, and carriers.
- Inability to visualize the whole supply chain network. Trouble tracking the flow and movement of materials and information will result in more supply chain management issues and lead to lost opportunities through both upstream and downstream processes.
- Problems communicating with drivers and partnering with the right carriers for each shipment. Communication is key to a smooth process; however, providing a device to keep communications open with drivers seems to be costly. Additionally, shippers need to recognize the need for collaboration and provide all network partners with accurate and timely information to eliminate mistakes.
- Limited executability deriving from legacy systems designed for in-house use. Legacy technology was developed almost exclusively for individual companies, meaning it's difficult to integrate with other systems and might well rely on outdated processes or strategies.
- Challenges in scheduling driver appointments for unloading/loading. Shippers reliant on outdated technology and limited logistics intelligence will have trouble prioritizing activity, managing delivery drivers, seeing dwell time charges, and experiencing staffing shortages. Without optimization, there is no end to the problems.
To further complicate things, supply chain managers and planners have been unable to rely on the steady-state models at the heart of most existing shipping planning systems. Instead, disruption is the new normal, and shippers need to play a vital role by making decisions based on real-time information. That approach is essential in all aspects and for the flow of supply chain management data to attain a critical mass that can derive meaningful benefits.
Ultimately, shippers must put people first, and they should keep the planning workforce healthy and productive by supporting new ways of working. In other words, they need a better strategy to manage freight and labor resources, and that's why data-backed management is essential.
What's Needed to Overcome Disruption: Data-Backed Management
Data-backed management is about the importance of real-time data aggregation, having a single source of truth for spend management, staying in communication, and collaborating with network partners. Remember that, according to TechTarget, data management is, " a process of ingesting, storing, organizing, and maintaining the data created and collected by an organization. Effective data management is a crucial piece of deploying the IT systems that run business applications and provide analytical information to help drive operational decision-making and strategic planning by corporate executives, business managers, and other end users." That degree of data management is complicated by the changing nature of the freight market in 2022.
As further predicted by S&P Global, "Early term contract discussion ranges for 2022-23 have risen significantly in the containers market, market sources told Platts, despite shippers hoping that spot rates would cool off in the coming year. Rather, early negotiations for the upcoming contract season, starting April, point to an unrelenting bullishness as the discussed price range is sharply higher than the current year, by between 20% and 100%."
Benefits of data-backed management include:
- Increased accountability. Transportation network partners must be willing to maintain transparency and take responsibility for actions performed, good or bad. They should be open to criticism, follow up on concerns, and continuously work to improve performance.
- Ability to manage by exception, freeing resources for your team. Advanced systems should help management resolve issues without involving the whole team and reduce manual intervention in shipping.
- Insightful reporting to keep shareholders informed. Increased reporting means staying consistent with regular, updated reports to keep the shareholders in the loop regarding any changes.
- Improved collaboration. Better collaboration means improved planning for truck arrivals and departures, knowing what's happening, and working as a team to increase shipping execution.
- Reduced capacity constraints. With the capacity crunch a major factor in today's freight world, identifying constraints as soon as possible, securing additional capacity, and ensuring all modes are the right fit for every shipment is critical. That process becomes self-propagating through data-based supply chain management and integrated logistics intelligence systems.
- Better carrier compliance with inbound and outbound routing guides. The routing guide is essential to keeping total landed costs in check. And shippers must hold carriers responsible for the failures, including late and missed deliveries. Leveraging data helps shippers adapt the routing guide as needed and avoid extra costs.
Even with these benefits in mind, shippers also need to understand a few things about how the right technology, i.e., analytics, can lead to actionable insights.
Analytics Transform Data Into Actionable Insights
Aggregated data in the supply chain makes it easier to see total shipping spending, and using data makes choosing the transportation mode easier too. Rather than being at the mercy of carriers, shippers can aggregate and analyze data to make informed business decisions.
Examples include knowing which ocean carriers have higher on-time delivery rates, which are more likely to roll cargo, and which are more likely to have errors in invoices.
Remember that the supply chain is full of risk and redundancy. Thus, analytics lend themselves to better risk management and automated shipping management through actionable insights. For instance, consider these valuable insights' impacts:
- Lower carrying cost on inventory that is held for over a period of time. This may not be much of an issue during periods of high demand. Still, tracking carrying costs can help shippers plan for changing fulfillment origins, adjust the transportation strategy, and get freight to the end-users faster.
- Using the most suitable mode for each return. Since e-commerce is already associated with a higher returns rate, having data and insight into what mode is the most suitable means for each return is critical. After all, returns' shipping costs will still impact overall profitability and may lead to changes in which fulfillment centers ship outbound freight versus those that receive returns.
- Predictive planning through advanced data analytics to identify potential changes in demand. Comprehensive supply chain controls come from predictive analytics capabilities that continuously identify what's expected to happen. That information can be further refined to create a series of best practices for achieving an optimal result. Furthermore, actionable intelligence can go a long way toward identifying which shipments are best suited for zone skipping, hub injection, or outsourced delivery.
- Accrual reporting and landed cost analysis in logistics intelligence. Tracking total costs helps shippers identify what is and is not working properly and begin to look for ways to overcome potential cost increases. For example, tracking customs' costs, delays and risks will help shippers account for changing inbound inventory and avoid stock-outs by shifting existing stock in response.
Shippers also need to know how to choose the right partners for analytics. Fortunately, that comes down to evaluating the critical characteristics of such partners through the following steps:
- Throughout evaluate your potential partners. Spend some time researching, looking for red flags. Read as much as you can find on the candidates you consider as partners. Trust is at the top of everyone's list to build and maintain with shipping partners. Therefore creating a trusted relationship between supply chain partners must be your priority.
- Consider their skill and expertise, especially where one potential partner might be stronger in areas where your current partner may be lacking. Working smarter and not harder is a skill critical to the supply chain.
- Joint performance management supply chain and partners should collaborate in planning, monitoring, and reviewing any work performed or completed. Performance measurement through analytics and core KPIs will go a long way toward reducing confusion and ensuring everyone fulfills their obligations, especially efficiency.
- Have the correct tools, reliable, up-to-date equipment, and software. The internet and software need regular updates to keep it working properly. Take that time and put the money into keeping them maintained and serviced regularly, as well as ensuring your partners maintain their systems around the clock.
- Long-term thinking, envisioning, and consciously working towards the future are also critical factors to consider. Shippers should set new goals for the long term. Setting a one-year goal to begin is suggested, unless you are more focused, then expand your goal to two years, and so forth.
- Communication is the best key to a successful plan. Thorough communication in the supply chain is essential to any strategy for success. Communication failures amount to more missed deliveries, a greater risk of returns, and higher shipping spending. Yet, an automated notification, text, or even an age-old phone call goes even farther and faster, especially if it's an emergency, keeping those factors in check.
Still, with the advancements of today's technology, shippers can keep everyone informed automatically, lessening their burden and promoting a more successful supply chain management strategy.
Put the Power of New Supply Chain Tech to Work with the Right Partner
There are many ways for today's shippers to attain and maintain success. Modern shipping management is about using data and recognizing the problems inherent in the systems of the past. There is a reckoning on the horizon for those who cannot keep up and evolve with the times. Furthermore, shippers that rely on outdated technology will be doomed to experience higher costs and limited actionability.
You read that correctly. Limited actionability, meaning shippers will only know about problems when they are too late to correct, will become the norm when relying on traditional supply chain mangaement systems, outdated processes, and legacy technology. However, a data-backed strategy that relies on technology can help curb the shipping cost increases of 2022 and beyond.Make sure you choose a supply chain partner to reliably produce positive results that will help you achieve financial stability, ensure route and mode compatibility, control cost of service, maintain adherence to regulations, and boost communication through technology and data transparency. Visit Intelligent Audit to get started and ensure your supply chain aligns with the modern ideals of today.