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Route Optimization and Strategic Investments: The Keys to Controlling Freight Costs

Learn how to create a reliable, cost-effective network with visibility for your customers and your team.

Transportation is a complex industry that requires much more consideration than just delivering items from point A to point B. With customers’ increasing expectations, transportation leaders are being tasked more than ever with the need to get items to their destination faster, more economically and with a higher level of visibility. Often times new innovations and technologies are associated with significant investments and difficult to justify. Instead, we should be looking to evolve the freight process through route optimization and strategic investment in partnerships with industry experts.

ROUTE OPTIMIZATION

Customers are all looking for the efficient delivery of their packages and to have visibility throughout the process. With that, customer satisfaction can be greatly increased by simply narrowing delivery windows and making them more frequent.

To do so, systems need to be in place to truly optimize the truckloads and create the ultimate efficiencies. This is a complex undertaking and means that providers need to re-adjust transportation routes and schedules frequently to ensure that the most efficient routes are being taken.

What does it require to really improve the bottom line and provide the ultimate ROI? Here are two key paths to take:

Optimize Warehouse Partnerships

Partnerships between drivers and warehouse operators can be an essential part of controlling costs. Technologies like flat-screen displays at the dock door to show relevant data and gamification are an investment but also essential for improving efficiencies in the processes for loading and unloading freight shipments. Reducing detention fees, lowering dock door turnaround times and boosting employee engagement with drivers are all benefits associated with enhanced technology in the warehouse. Investment in this step of the freight process improves distribution, grants greater transparency and ultimately provides cost savings.

Focus on the Final Mile

The last leg of the delivery process is always the most visible to consumers, and last-mile logistics makes it essential for freight partners to really understand the latest innovations. There are changes taking place every day and it is essential to not only be aware of the latest technologies but also to ensure these new steps are truly worth the investment. Customer perception can be won over through the optimization of order fulfillment, but the cost of these innovations must be balanced with the need to satisfy customers.

Food Marketing Institute predicts online sales of groceries could expand to $100 billion annually by 2025. This growing industry is highlighting the increasing desire to have same-day delivery or on-site pick-up options. The innovations in this particular corner of the industry emphasize what is important for any freight customer: speedy delivery options with an emphasis on reliability and adherence to delivery time appointments. Customer demands and delivery expectations are only growing and focusing on that last mile could help cut delivery and transportation costs throughout the supply chain.

STRATEGIC INVESTMENTS

While integrated technology platforms can support warehouse partnerships and improve distribution in the final mile, other investments must take place to truly control freight costs. Deliberate evaluations on the costs associated with creating greater efficiencies can truly pay off when it comes to cutting logistics costs. Key considerations include:

Tracking Technology

Tracking—whether it is the actual package or other tools throughout the route—provides greater customer satisfaction and allows more immediate adjustments to be made throughout the supply chain. Offering a simple notification of actual arrival times versus estimated timing could in fact significantly improve the customer’s experience.

Temperature Control

In the food supply chain, investment in specific freight technology is significantly valued as new tools are becoming essential to improve storage and general transportation of perishable products. From sensors, which provide real-time insight on temperature accessible anywhere and at any time, to insulated shippers, investments in this area can mean the difference between a successful shipment and ruined products. Cold storage has the opportunity to reduce labor, materials and affect the larger freight costs but it is vital to assess whether an insulated shipper or a simpler cold box will provide the most savings throughout the fright process.

Strategic Transportation Planning

As more technology enters the supply chain, more and more data are being created with the ability to improve future freight processes. From the moment a package or shipment enters the supply chain, data is created up until the moment it is delivered with transportation planning software. This can be utilized to provide the best insight on delivery routes and reveal the best options for improved timing, greater satisfaction and of course, lower costs. Adaptations should be made based on this data on the right truck sizes, delivery window options and even driver shifts.

Driver Support

The American Trucking Associations projects a shortfall of 174,00 truck drivers by 2026, making this an essential investment to support the future workforce. A recent survey from Kenco and CarrierLists reveals that drivers are experiencing frustrations with 71% of respondents considering themselves dissatisfied with compensation. Taking the time to address driver concerns and making changes to be a better partner can in turn reduce overall costs by eliminating turnover and training costs.

Freight Contracts

Contracts are a large part of the costs currently affecting the freight industry, accounting for a significant portion of logistical spends. To ensure the best value, a transportation management system should be employed to compare rates of contract motor carriers and optimize freight movement. Rates should be benchmarked with real-time data and contracts negotiated to ensure needs are being met in the most cost-effective way.

Cutting costs while improving customer satisfaction and maintaining the level of integrity of the freight program previously reached can often seem implausible. By examining the best ways to apply technologies through strategic relationships with transportation management, you can create a reliable, cost-effective network with visibility for your customers and your team.

Mike Pallo is vice president of transportation sales at Kenco, a third-party logistics provider.

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