Is Your Transportation At Its Best 2011

Document Sample
Is Your Transportation At Its Best 2011 Powered By Docstoc
					Is Your Transportation
At Its Best?
The Top 10 Transportation Management Best Practices


WHITEPAPER
JANUARY 2010




                                 nulogx
                            Transportation Management Solutions
                                                              CONTRIBUTORS
                                                              Gary Breininger, President, Breininger Associates
                                                              Rob Fenwick, VP Transportation, Maple Leaf Consumer Foods
                                                              Sylvie Messier, Corporate Transportation & Customs Manager,Ipex Management Inc.
                                                              Doug Payne, President & COO, Nulogx Inc.
                                                              Alan Saipe, President, Supply Chain Surveys Inc.
                                                              Jorge Villalobos, National Transportation Manager, Acklands-Grainger Inc.



                                                              FACILITATOR
                                                              Scott Irvine, VP Business Development, Nulogx Inc.




IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX
     Is Your Transportation At Its Best?
     The Top 10 Transportation Management Best Practices
     As your business grows, it’s only natural that it becomes more complex and challenging to manage. Your
     transportation processes are no different. Freight costs can represent a significant component of your supply
     chain – often around 5-7% of sales for manufacturing, retail and wholesale/distribution companies. For many
     firms the fact is this responsibility is not managed as well as it could be — which means fertile ground for
     significant improvements.




     F
                      reight costs can represent a significant component of your supply
                      chain — often around 5-7% of sales for manufacturing, retail and
                      wholesale/distribution companies. For many firms the fact is this
                      responsibility is not managed as well as it could be — which means
                      fertile ground for significant improvements.

     Here’s what the best in the business are doing to succeed. Typically, they have
     significant freight spends (annual budgets greater than $10 million). But that
     doesn’t mean if your operation and budget are smaller there’s not a lot to learn—
     and many good reasons to follow their lead.



     1. Pay Attention (Or, Pay More For Your Freight)                                            What you are overlooking
     What you’re overlooking may be costing you more than it should. Much more.                  may be costing you more
     One of the biggest mistakes companies make is to assume that everything is in               than it should.
     order because their transportation costs are in line with past experience. “Sales
     are up 10%, so transportation will be up 10%” is a usual approach to managing
     this function. “Not necessarily so”, say best practice leaders.

     Understanding the strategic and cost implications of your company’s
     transportation operations—then forming and implementing a comprehensive
     transportation plan—can play an important part in your success.

     And most importantly, pay attention to your customers!

IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                        PAGE 1
     You can’t manage what                         2. Measure. Monitor. Manage
     you can’t measure.                            You can’t manage what you can’t measure. And today, most Transportation
                                                   Managers are missing the timely and accurate information they need to
                                                   track trends, identify problems and take action proactively. That’s because
                                                   the spartan and much-delayed data pulled from an Accounts Payable or
                                                   ERP system does not typically provide the right numbers in time to make a
                                                   significant difference.

                                                   To capture meaningful data within an actionable time frame, some sort of
                                                   business intelligence system is required at a minimum. This could range
                                                   from a Freight Auditing Solution, to a Data Warehouse linked to an ERP
                                                   application, or most comprehensively to a full blown Transportation
                                                   Management System.

                                                   Such a system supports and drives management decisions by collecting
                                                   accurate data, consolidating it and delivering as close to real time feedback
                                                   as possible. So, a Transportation Manager can take confident action knowing
                                                   what factors (eg routing guide compliance, fuel surcharges, accessorial
                                                   charges, weights and shipment counts) are changing in the mix—and why—
                                                   without spending hours, if not days, extracting data and creating complex
                                                   spreadsheets.




     Working effectively with                      3. Align Transportation Strategy with Corporate Goals
     your carriers takes strong                    Is your company’s success dependent on customer service and speed to
     relationships.                                market? Or, on strict cost containment and price competitiveness? The
                                                   business you’re in, and the role shipping plays within your operations, should
                                                   directly shape your transportation strategy.

                                                   With an appropriate transportation strategy in place, all involved in making
                                                   day-to-day operating decisions will understand the company’s goals and
                                                   priorities—and make the right calls. For example, it may make sense to spend
                                                   hundreds of dollars extra for a faster level of service if the result is a reduction
                                                   in inventory worth thousands of dollars. Alternatively, it probably does not
                                                   make sense to use expedited road carriers for stock transfers when intermodal
                                                   service would meet delivery requirements.




IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                        PAGE 2
     In reality, most companies                    4. Strong Relationships Are Worth More Than Money
     don’t tender their freight                    For most shippers, getting good value means building a customized and
     as often as they should.                      integrated solution consisting of multiple modes and carriers. Doing this
                                                   well requires developing excellent relationships with your carriers and
                                                   understanding the relative strengths and weaknesses of each so you build the
                                                   best network for your needs.

                                                   Also, as you are building your solution, your logistics providers should
                                                   be customizing their solutions to meet your needs too. Good ones will
                                                   understand your business and work to develop process improvements that
                                                   benefit both your operation and theirs. And when things go wrong, it is
                                                   far easier to fix the service with the current provider than replace them.
                                                   Building your network, and working effectively with your carriers takes
                                                   strong relationships based on mutual trust and open communication. Good
                                                   relationships such as these extend far beyond the bottom line.




     Thankfully there are                          5. Tender Freight On A Regular Basis
     systems available to assist                   (Controlling Cost and Quality)
     in this.                                      Yes, good working relationships with your carriers are extremely valuable.
                                                   But you still need to pay a fair rate for the service you are receiving. The
                                                   only way to know for certain, is to tender (or RFP, Request for Proposal) all
                                                   of your freight—though not necessarily all at the same time. The frequency
                                                   that you do this will depend on a number of factors such as market conditions,
                                                   changing operating conditions and corporate procurement policies.

                                                   A structured and disciplined procurement event will ensure that carriers put
                                                   forward their most competitive proposal. It is important to bundle as much
                                                   similar freight as possible into your bid (a company-wide aggregation) so
                                                   carriers are bidding on the largest opportunity possible. This may require
                                                   aligning contracts to expire either at the same time, or on a staged basis
                                                   depending on your scope of operations and procurement strategy.

                                                   Provide honest and accurate information on your shipping requirements
                                                   and patterns. It is important to note that the intent should be to get “fair”
                                                   rates from carriers. (Proposed rates that do not reflect your actual operating
                                                   conditions, or that are not compensatory, can ultimately result in poor
                                                   service and additional costs that extend well beyond dollars saved on cheap
                                                   transportation.) Keep in mind, changing providers can cause disruptions in
                                                   your supply chain. So frequent switching is not recommended unless there are
                                                   significant service or cost issues.



IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                      PAGE 3
                                                   In reality, most companies do not tender freight as often as they should –
                                                   mostly because bids are very complex and time consuming. Evaluating and
                                                   ranking each bid’s impact on your business, and ultimately selecting the right
                                                   mix of carriers could require an enormous number of ‘What If?’ scenarios.
                                                   Thankfully there are systems available to assist in this analysis.

                                                   Good transportation managers are adept at negotiating well with carriers to
                                                   secure competitive contract rates. However “great” transportation managers
                                                   will also seek to understand the detailed accessorial charges that might
                                                   increase overall costs, and work to find opportunities to reduce or eliminate
                                                   the cost of variable, seasonal or incidental charges that may result.

                                                   Another complexity, is actually knowing if you saved any money as a result
                                                   of your bid. With so many changing factors it can be tough to tell if your
                                                   changing transportation expenses are due to good negotiations or changes in
                                                   volume, distance travelled, or accessorial charges.

                                                   The good news is that the same systems that can help you analyze the bids,
                                                   can also be very helpful in providing ongoing monitoring and ultimately
                                                   determine if you achieved your objective.




     If freight managers stray                     6. Create A Corporate Routing Guide—And Stick To It
     from their routing guide,                     Having tendered, and selected your transportation partner(s), actualizing
     leakage occurs.                               your new found benefits relies on creating a Corporate Routing Guide —and
                                                   complying with it. National, and regional, freight managers use the Routing
                                                   Guide to determine which carrier is used for a particular shipment. For some
                                                   companies this takes a shift in operations at a minimum, and a change in
                                                   culture more broadly. If freight managers stray from the guide “leakage”
                                                   occurs; your company won’t ship the volume it has promised its carriers, so in
                                                   turn it doesn’t qualify for the negotiated volume discounts.

                                                   Large companies, in particular those with multiple shipping locations and
                                                   a large number of freight users, will need to invest time educating and
                                                   informing their internal stakeholders on optimal transportation practices. In
                                                   addition, these users will need a comprehensive set of tools to assist them in
                                                   making the correct carrier choice and ensure the delivery is made in the most
                                                   cost effective way. In addition to routing guides, these tools could include
                                                   standardized freight reports, process manuals, as well as rating engines and
                                                   potentially a Transportation Management System.

                                                   Routing Guide compliance is important because transportation companies will
                                                   often be more responsive with both price and service proposals to shippers

IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                      PAGE 4
                                                   that represent a larger share of their business. Therefore consolidating your
                                                   spend with a core carrier program often results in both better service and
                                                   better prices. In addition, LTL and Small Parcel carriers with fixed networks
                                                   generate economies of scale when they channel large volumes of freight
                                                   through their networks, which can be passed on to their preferred/high volume
                                                   customers as discounts.




    The devil is in the details –                  7. Audit Every Carrier Invoice (The Devil is in the Details)
    Audit every invoice.                           The simplest way to drive out 2-5% of your freight costs is to audit your
                                                   invoices. That’s because this fast and furious business is rife with billing
                                                   mistakes. According to a recent CITA benchmarking study, more than 14%
                                                   of shippers surveyed stated that more than 5% of their LTL and TL invoices
                                                   contained errors, while more than 50% of LTL shippers reported error rates
                                                   of greater than 1%. Incorrect weights, inappropriate contract rates, duplicate
                                                   invoices, missed consolidations, and unapproved accessorial charges are a few
                                                   errors (unintentional or otherwise) that run up your bills.

                                                   While auditing can be done manually, rating shipments can be mindboggling.
                                                   The most efficient way to measure and monitor activities is with a
                                                   computerized Audit System, or Transportation Management System (TMS)—
                                                   your own, or outsourced. These systems can capture every detail of every
                                                   shipment in a database for review and analysis. Such a system may not
                                                   only pay for itself by generating savings—every invoice is compared to
                                                   the contract—once implemented it becomes a strategic management tool:
                                                   providing analytics and insight into your transportation activities.




    In a recent case study,                        8. Eliminate Manual Processing (Benefit from TMS & EDI)
    the efforts of 3 people                        Increasing the efficiency and effectiveness of your transportation operations is
    working all day, every                         key to your success. One option to accomplish this is using a Transportation
    day, to optimize loading                       Management System that leverages 2-way electronic information exchanges
    and shipping was done by                       such as EDI (Carrier <-> Shipper). Another option is an Audit System that
    a new TMS in 5 minutes
                                                   receives electronic invoices—streamlining work and eliminating manual
    with superior results.
                                                   processes. Such systems can rapidly and seamlessly create load plans, select
                                                   carriers, rate and tender shipments, audit invoices and more. In a recent case
                                                   study, the efforts of 3 people optimizing loads and managing shipments, was
                                                   done by a new TMS in a 5 minute daily routine; with superior results—saving
                                                   the company $250,000 in annual freight costs alone.

                                                   While it may never be possible to completely replace all manual aspects,
                                                   leaders continually move in that direction. In the most productive systems
IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                        PAGE 5
                                                   80% or more of carrier communications is electronic. Making that happen
                                                   may require shifting the burden of data input to your carriers and vendors.
                                                   With a web-based TMS, you can direct both your carriers and possibly
                                                   vendors shipping to you to a web page where they are responsible for entering
                                                   all required information. While rewarding, implementing such a system on
                                                   your own can be difficult and time consuming. An option is to partner with a
                                                   provider that has pre-existing connections to carriers, specialized resources
                                                   and industry expertise.




    To optimize everything,                        9. Optimize Everything: Shipments and Carriers
    a TMS is an absolute                           (Baby Steps to Perfection)
    necessity.                                     To optimize everything, a Transportation Management System (TMS) is
                                                   an absolute necessity. In the best case scenario, your Enterprise Resource
                                                   Planning (ERP) system will interface directly with your TMS and your
                                                   Warehouse Management System. This level of systems integration provides
                                                   strategic, planning, cost and operational benefits. With the myriad of rates,
                                                   modes and lanes it is difficult to know which carrier is the best choice for any
                                                   given shipment. Charges can vary based on weight, destination and service
                                                   level required. An integrated system will help you capture, analyze and fine
                                                   tune all aspects of your shipping operations on a daily and/or shipment-by-
                                                   shipment basis.

                                                   The key in transportation is to consolidate shipments as much as possible
                                                   – the larger the shipment, the lower the relative cost. There are numerous
                                                   consolidate strategies – some are as simple as grouping same Origin-
                                                   Destination shipments together, others include building a multi-stop truck
                                                   load, or can be even more complex like setting up a consolidation point, cross
                                                   dock or pool point operation. These processes are very complex, and computer
                                                   dependent. The bottom line however, such a solution can generate freight
                                                   savings of 5 – 15%.




IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                        PAGE 6
    An objective and candid                        10. Continuous Improvement (Test. Learn. Integrate. Repeat)
    self-assessment of your                        Best practice leaders focus on process improvements wherever they can be
    current Transportation                         found. At this level of refinement, your greatest strength is an open mind—a
    Management practices                           willingness to ask ‘What If?’— to challenge ‘Because we’ve always done
    is the starting point for                      it that way.’ Nothing is sacred. A few of the popular areas where leading
    determining the potential
                                                   companies are finding improvements are:
    for your company to
    improve.
                                                   •          Managed In-Bound Programs
                                                   •          Network Modeling/Review
                                                   •          Consolidation Strategies
                                                   •          Multi-shipper Collaboration
                                                   •          Cube and Load Maximization
                                                   •          Customer Cost-to-Serve Analysis
                                                   •          Modal Alternatives

                                                   As optimization strategies like these become more and more complex, there
                                                   is an increasing need for data analysis and systems to support learning and
                                                   understanding, and in executing on identified opportunities.

                                                   Given the interdependent nature of the business, such improvements
                                                   often happen in collaboration with internal departments (eg marketing
                                                   & production), logistics providers, or other supply chain partners. Their
                                                   input can be very valuable—sparking new ideas and uncovering hidden
                                                   opportunities.




        How do your processes stack up?
        An objective and candid self-assessment of your current Transportation Management
        practices is the starting point for determining the potential for your company to improve the
        productivity of this function.

        Cost reductions in the neighborhood of 20% are not unheard of, all of this flowing directly
        to the bottom line.




IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                                    PAGE 7
          Helping You Be Your Best:                                 nulogx
          These 10 best practices in transportation management have been compiled by Nulogx through
          discussions with a number of industry leading Transportation Managers and consultants. Nulogx is a
          Canadian-based leader in North American transportation management solutions, and has distinguished
          itself by providing unparalleled insight, and best-in-class transportation solutions, to over 100 North
          American shipping clients. The end result: improving clients’ transportation processes and reducing
          costs.

          Nulogx delivers unprecedented levels of service to North American shippers through the combined value
          of a best-in-class TMS Application, expert Managed Services, and the largest Freight Audit and Payment
          service in Canada. Nulogx’s business model is “Save As You Go”. There is minimal up-front investment
          in systems, staff or other resources—so you generate savings almost immediately. Its transaction-
          based pricing is quickly off-set by freight savings, creating an instantaneous and low-risk ROI for your
          company.


          Contact Us:
          To learn more about how your company can implement Transportation Best Practices and directly
          benefit from working with Nulogx, contact Scott Irvine, VP Business Development at
          scott.irvine@nulogx.com or call 905.486.1162 x 208

          http://www.nulogx.com
          http://www.cgfi.ca




          SPECIAL LIMITED TIME OFFER:
          For a limited time Nulogx is offering qualified companies a free benchmark of their shipping costs
          against the CGFI index. By doing this you will learn how your costs compare to the market in general,
          as well as the source of this variance (e.g. carriers, regions, origins).

          With one simple and easy assessment you will have the ability to gain insight into potentially large cost
          savings opportunities.

          Request yours here: http://www.nulogx.com/transportation-assessment.html




IS YOUR TRANSPORTATION AT ITS BEST? THE TOP 10 TRANSPORTATION MANAGEMENT BEST PRACTICES NULOGX                        PAGE 8

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:12
posted:8/27/2011
language:English
pages:10
Global Supply Chain Council Global Supply Chain Council http://www.supplychains.com
About Founded in 2002, the Global Supply Chain Council is Asia’s leading professional organization serving a fast growing community of more than 60,000 executives and representing leading companies who view their value chains as a critical driver of shareholder value and competitiveness. As an independent professional organization, the Council’s mission is to stimulate the understanding and adoption of supply chain management by providing a range of services including websites, magazine, directory, newsletters, research, workgroups, conferences, maps, video programming among other services. Targeting manufacturers and retailers end-users on line, in print and in person, the Council delivers a unique combination of education and lead-generation sources that helps logistics service providers, consultants, and software vendors and equipment suppliers achieve their growth objectives.