Ongoing global economic uncertainty prompted by fluctuating fuel costs, a growing shortage of drivers and decreasing transportation capacity is shining the CEO’s spotlight on the business of transporting goods. To remain competitive, shippers and their core carriers must collaborate within a single, agile supply chain built around shared data, business processes and customer service objectives. A company’s key transportation partners can serve as a valuable strategic asset if stronger shipper-carrier relationships are formed based on trust, information sharing and mutual performance goals.
Translate Forecasts into Specific Actions
A crucial first step in creating this kind of collaborative relationship is ensuring that forecasts are not only shared across both organizations— but that they are shared with carriers at a practical, actionable level.
For example, instead of viewing historic sales only at the purchase-order level, carriers can add significant value if they are given visibility at the discrete shipment level, including such details as customer locations and addresses. This equips carriers to price their services more accurately, as well as understand how they will serve quarterly demand at a day-to-day, geographic level.
By sharing both longer-term, high-level demand forecasts and granular details with core carriers, shippers can maximize their overall logistics responsiveness—and position carriers as proactive partners, instead of passive reactors.
Continuous Learning and Improvement
Carriers, in turn, need to share a new level of detail with their shippers. When carriers reject an order, it is important for shippers to know the underlying cause—whether it’s a short-term shortage of drivers, a truck capacity mismatch, regulatory compliance obstacle or some other issue.
Rejected business is just one example of a “lesson learned” that should be shared and incorporated into future planning. Missed deliveries, incomplete shipments and other shortfalls can inform future plans through a closed-loop process that considers performance metrics from both businesses.
When a shipment goes wrong, too often the result is finger-pointing and an adversarial mindset. Instead, shippers and carriers should work together to perform a causal analysis that reveals the underlying issues. They must collaborate to not only answer the question “What went wrong?” but also “How can we do better in the future?” This is the foundation for continuous improvement across the entire supply chain, spanning both shipper and carrier operations.
Perhaps the most critical challenge for both shippers and carriers is learning to plan, fine-tune and execute on a continuous, closed-loop basis that operates as close to real time as possible. This kind of agile planning and replanning requires carriers to provide an extremely granular level of detail on their own day-to-day performance.
Are deliveries going to be late? Are truckloads less full? What is happening at the loading dock today? If shippers have access to this kind of real-time information, they can consolidate or delay customer orders to achieve cost efficiencies, prepare the downstream supply chain for late shipments and physically link in-transit trucks to emerging opportunities. In short, they can build a highly responsive transportation function that is based on continuous movement, increased efficiency and significant cost savings.
This requires a level of trust and real-time communication that is new to most shippers and carriers. However, as both parties strive for continuous movement and “just right” transportation capacity, it’s clear that real-time collaboration represents the future of transportation management.
The Power of Partnership
The current business environment requires both shippers and carriers to seize competitive advantage in every possible area. Instead of viewing their relationship as customer/service provider, both organizations can gain a significant strategic edge by increasing their level of collaboration—and viewing one another as real partners with a common goal. By sharing insights about past performance, future plans and real-time changes via advanced technology tools, carriers and shippers can link and align their businesses.
Equipped with actionable forecasts, a collaborative view of daily performance and a closed-loop planning process that encompasses historic lessons, both shippers and carriers will be poised to deliver excellent service levels in the future — no matter what challenges that future holds.
Fabrizio Brasca is vice president, global logistics at JDA Software (www.jda.com). He is responsible for developing strategic transportation innovations across all industry verticals.