September 24, 2014
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
- Conduct detailed analysis of your transportation practices in order to gain an understanding of your historical activities and metrics.
- Set a benchmark of current metrics.
- 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.
- Document and share with leadership a strategy of transportation management solutions (consider our 10 we outlined in the previous post).
- Execute the strategy by employing your new solutions.
- 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.