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September 24, 2014 by

How to Create a Transportation Management Strategy in 6 Steps

This article is the second part in a series from Adam Robinson at Cerasis, Inc.

In our previous post we took a look at ten transportation solutions to consider when you are first considering a new transportation management strategy. In today’s post, we will explain the six steps to creating your transportation management strategy. Like any successful company initiative, before you begin executing transportation management for your company, it is vital to first create a transportation management strategy.

In years past, transportation management was viewed as a necessary evil and approached tactically. Essentially, less thought or strategy was needed on the front end to get your product from point A to point B. You got an order, called your local carrier rep, got the cost of shipping, sent it off, and then accounted for it in the general accounting ledger. In today’s complex and diverse transportation environment, however, it is now necessary to view transportation management not as a simple functional process, but more as a strategy to derive more value (read: reducing overall costs and effectiveness) in order to stay competitive.

Yes, at its purest form, transportation management is moving one thing from point A to point B (and sometimes a few more letters depending on the specifications of an order), but really, transportation management is more than that. You must account for many things to stay competitive. These include, but are not limited to: making yourself a “shipper of choice” during the current great trucking capacity crunch,  employing creative forms of transportation procurement via different modes and programs like pool point distribution, managing multiple locations and vendors for routing compliance, and of course the complexity of setting expectations and communicating with all the players in the supply chain about the shipment. Now, let’s talk about the steps you must take and include in your transportation management strategy.

6 Steps to Create a Transportation Management Strategy

  1. Conduct detailed analysis of your transportation practices in order to gain an understanding of your historical activities and metrics.
  2. Set a benchmark of current metrics.
  3. Determine new desired outcomes (such as improved relationships with vendors, carriers, etc., or improved overall costs) and KPIs (on-time delivery or freight claims ratios) based on those key transportation metrics.
  4. Document and share with leadership a strategy of transportation management solutions (consider our 10 we outlined in the previous post).
  5. Execute the strategy by employing your new solutions.
  6. Change tactics/activities based on new data from these core transportation metrics in order to continue to improve transportation best practicesto reach your desired outcomes and KPIs.

Photo by Angelo Rosa

September 16, 2014 by

10 Transportation Management Solution Considerations for your New Logistics Strategy

This post is a guest blog by Adam Robinson at Cerasis. 

Transportation management solutions are no longer just about moving freight at the lowest possible cost. Companies are using effective transportation management as a competitive advantage tool in the ever-challenging economic and commercial landscape. Additionally, shippers are now seeing transportation management solutions both internally or those provided by a logistics services provider (such as a 3PL) less as a commodity and more as a collaborative relationship between themselves and carriers and third party logistics services providers.

With carrier capacity tightening and demand for shorter delivery cycles growing, the best bang for the buck comes from supplementing traditional procurement cost-saving and shipment consolidation strategies with innovative solutions.

This is especially relevant for 3PLs who are transportation management solutions providers with service fees based on reducing cost and streamlining the customer’s supply chain.

What do you mean by Transportation Management Solutions?

First, let’s get on the same page with our definition of “transportation management solutions.” You will first need to understand the term transportation management. Transportation management is defined according the CSCMP Glossary as the management of transportation operations of all types, along with associated activities, including managing shipping units, labor planning and building, shipment scheduling through inbound, outbound, intra-company shipments, documentation management (especially when international shipping is involved), and third party logistics management.

10 Transportation Management Strategy Considerations from a Third Party Logistics Company that any Transportation Manager Could Employ

  1. Focus on “Compliance, Enforcement, and Expectations”: In today’s advanced technology environment, visibility to shipments and communication of any en route deviations should be a given. One of the most overlooked success factors to shipment tracking is simply defining what the expectation is. Too often the 3PL and customer are not aligned on expectation of shipment tracking. Additionally, having a robust process, and authority to act when shipments do not go as planned, is important to effectively manage distressed shipments. If you are not using technology such as a web-based transportation management system, you may not have the competitive advantage your competitors are realizing.
  2. Remember Collaboration in All Areas to Become “Shipper of Choice”: By putting in strategies that drive capacity commitments, offering easy pay terms, and rewarding performance, shippers will make it easier for carriers to do business with them. Understanding ways to aid your partner carriers is crucial in tight capacity markets. Is this a lot of work to accomplish? Yes, it can be, if you’re managing carrier relations in house, but it’s an important focus so make sure you budget for these resources. If you don’t have the resources, it is a good indicator to outsource expertise to a logistics services provider where carrier relations is a focus.
  3. Think about Transportation’s Relation to the Overall Business: Remember, transportation doesn’t exist in a vacuum; look at transportation’s effect on the entire supply chain. Further, a focus on transportation management solutions from an organizational view can enhance inventory control to drive warehouse efficiency. Effective transportation planning takes into account material availability and order fulfillment requirements, ensuring warehouse capacity and optimally utilized resources. Attempting to “levelize” flow through a DC or inbound to manufacturing is a critical aspect to controlling overall logistics costs.
  4. Use Freight Data to Gain Visibility to Freight Cost Drivers: Freight movement has become all about data mining — you have probably heard the buzzwords “Big Data” being thrown around ad nauseum. The ability to analyze freight spend down to a single customer, at an order or even at a product level, can be a key input to developing competitive product pricing and identifying opportunities for change.
  5. Look at Mode Optimization: Highly sophisticated order optimization capabilities can be provided by a 3PL or internal transportation management solutions team, without compromising the delivery requirements and freight spend budget. Transportation management systems use business logic and technology to determine the optimal mode of transportation.
  6. Consider the Environment in Transportation Management Planning: Go green through sustainable business practices. A smaller carbon footprint can be had in nearly any operation by consistently and continuously seeking shipment planning options, consolidation opportunities, and mode shift capabilities.
  7. Set Up the Transportation Department to Scale and Sustain: As your organization expands through growth and acquisitions, will you simply be adding more to the freight and transportation budget with not only increased costs but additional resources such as technology and labor to meet the increased demand and complexity? Having scalable transportation management solutions are critical to meeting today’s rapidly changing business environment. Integrating all your business units and acquisitions onto one platform will allow you to manage your business through a single lens.
  8. Understand and Manage with the Right Transportation Metrics: Utilizing the right transportation metrics to monitor the health of your transportation practices and strategy execution is critical for long term success and analysis for continued performance improvements. Transportation management systems provide a wealth of information, but it can be overwhelming finding the right metrics to manage your business. Identifying key process indicators will help focus your search for the right data.
  9. Nothing is 100% Predictable, Except Change: Prepare for change and exception management by employing these transportation management solutions:
    • A focus on partnership, collaboration, and adherence to process execution driven by a strategy
    • Having the mindset to accept changes is critical for you or even any 3PL to deliver value
    • For your bosses and leadership to expect from you or even when engaging with a 3PL or TMS software provider and leadership asks that no one change anything due to a lack of resources or focus on strategy, but deliver a different outcome will lead to disappointment
  10. Consider Getting Outside Help from a 3PL to Provide and Conduct Transportation Management Solutions: When selecting a 3PL to manage your business, defining the rules of engagement is critical to success. This first starts with understanding your own needs and setting out to find the 3PL who is able to provide the solutions you need to align with those needs. Use our handy checklist to first determine your needs.

 

Environmentalism

September 08, 2014 by

Part 5: What can we conclude from all of this, and what can everyone do to contribute to a greener world? (Article Series)

In our latest article series,  Automation GT takes a look at the role played by manufacturing and automation in climate change throughout history. Rachel Greenberg writes technical and marketing content for Automation GT. 

If there is one thing that we can conclude from the evidence collected here, it is that one of our major obstacles in changing our poor track record in regards to the environment is in changing our culture. While we as a culture continue to demand material goods in large, cheap quantities, manufacturers will continue to drive production, and while our economy continues to depend on fossil fuels, manufacturers will continue to produce goods in a way that is heavily dependent on fossil fuels.

So in the meantime, what can manufacturers do to produce goods in a more sustainable way, and how can they advocate for a more environmentally conscious consumer base and political scene? And what can consumers to do demand a more environmentally friendly marketplace?

 

For Manufacturers:

One of the most impactful things that a manufacturer can do to protect the environment is to constantly reevaluate their process and weed out inefficiencies. This will require a variety of steps:

  1. Identify and replace any out-of-date machinery in your factories. Older machines tend be less fuel efficient and clean than their newer counterparts.
  2. Examine your supply chain and eliminate redundancies and slow-ups. If there are any instances in which you could collocate certain operations that were previously spread out, you may be able to reduce your carbon footprint from travel and exportation/importation. You may also be able to utilize fewer employees to achieve the same amount of work. This will mean fewer people commuting every day and fewer resources that your business must allocate for all of their employees.
  3. Automate as appropriate. Choosing to automate your operations can grant you significant means to decrease your carbon footprint. The more you automate, the fewer employees performing redundant tasks you will need, which may mean fewer cars on the road. If you can automate sufficiently, you make be able to convert your operations into “lights out” manufacturing: in some such situations, businesses have been able to entirely or almost entirely automate their processes to the point that they can turn off the lights, air conditioning, and maybe even the running water for their facilities because there are no people inside who would require those facilities.
  4. If possible, restructure your factories to rely partly or entirely on renewable and cleaner energies. Investigate different options in converting your factories’ machines and central power supply to different types of energies based on what is available for your region. Consider hiring a consultant to help you improve your energy policy, or consider funding research projects on the local, national, or international level that might produce cleaner fuels, especially on the scale needed by manufacturers.

In addition, manufacturers can act as advocates for the development of cleaner systems, and more importantly, for a manufacturing culture that doesn’t rely on fossil fuels and that prioritizes ecological preservation. Depending on your place in the production process, you should be able to use your particular powers and privileges to your advantage in advocating for better environmental policies. And don’t restrict yourself to advocacy within your organization; seek out opportunities where your authority, position, skill set, and experiences might be valuable to advocacy groups or nonprofits engaged in environmental policy.

 

Advocacy for Manufacturers

As a manufacturer, you have particular insight on the inner workings of the manufacturing process and the specific ways in which the manufacturing process can be wasteful and inefficient. Be observant and make notes when you notice places where improvements could be made and bring those observations to your supervisors, administrators, etc. Do research on what other factories have been able to do and craft proposals for your own factories. Bring your successes to the public so that other manufacturers can achieve similar successes. If appropriate provide workshops or classes on improving environmental impact.

 

Advocacy for Administrators

As an administrator in a manufacturing or production operation, you likely have a good perspective on what goes into project and process development. This means that you have the unique opportunity to weigh in early in the production process when you notice waste. You have the ability to constantly press for more progress, for even better conservation, even when it seems that you’ve done the best you can do and are being maximally conservative.

You also have the power to encourage more research to ensure that your products are made from the best materials (safe, sourced responsibly, refined in fuel efficient ways, etc.) and that you always purchase from and sell to similarly environmentally responsible partners.

You can also fund and support research in your own and in other companies towards alternative fuels and technologies. If any feasible systems emerge, set an example by becoming an early adopter.

 

Advocacy for Everyone

Of course, there are always things to do politically and socially to encourage better environmental behaviors. However, industry represents 19% of global greenhouse gas emissions, so we would do well to specifically address how everyone can contribute to improving this sector.

Everyone can get engaged with this conversation on the political front. (Check out this interesting TED Talk on reaching out in an effective way to your representatives.) There are a few particularly important areas that deserve your attention:

  1. According to Greentech Media, there are three issues of particular importance: providing funding for the proposed clean energy hubs, reauthorizing the advanced manufacturing tax credit, and passing a progressive carbon tax. More clean energy hubs would give manufacturers greater options in choosing clean energy. The manufacturing tax credit rewards environmentally conscious manufacturing. And a progressive carbon tax would ensure that the cost of fossil fuels would reflect that actual environmental cost of our failure to alter our economic dependence on fossil fuels.
  2. Let your shopping habits reflect your environmental concerns. Decrease or eliminate unnecessary purchases. Whenever possible, choose locally and sustainably produced goods. Limit your consumption of meat and other high-environmental cost products.
  3. Limit your direct use of fossil fuels. Avoid unnecessary or extravagant travel. Choose biking, walking, and public transportation when possible. Offer incentives for your employees to do the same. Offer employees options to work from home or attend meetings remotely to reduce travel.
  4. Use your environmental advocacy to your marketing advantage. Advertise your positive environmental choices as a positive aspect of your business. Promote trends that similarly advocate environmentalism and minimal consumerism.

Part 1: The Industrial Revolution, Climate Change, Global Environmental Problems, and Manufacturing

Part 2: Does automation provide any environmental aid? How can innovation lead to a better environmental picture?

Part 3: Is automation a better environmental option than the alternative? Can we keep people at work while also saving the environment?

Part 4: How do global politics and other factors affect the environmental situation of manufacturing?

Part 5: What can we conclude from all of this, and what can everyone do to contribute to a greener world?