As a 30+ year veteran in logistics, I am biased and I admit it. I believe transportation is the least complex, yet most critical component of the supply chain. It creates value by ensuring product is available when and where it is requested by customers – as quickly, cost effectively, and consistently as possible, from point of origin to point of consumption. And if that isn’t enough to create a bias, maybe these well-known facts will: transportation costs represent the biggest slice of the supply chain cost pie (nearly 60 percent of every supply chain dollar is spent on transportation), and transportation costs can represent 3-12 percent of revenue or more depending on the product type and industry.
And so, the role of a transportation manager today is very important. The purpose of this article to help transportations managers contemplate how to get involved further upstream in the supply chain (think cost avoidance of doing things sub-optimally) and downstream (think cost reduction by driving continuous improvement into processes/decisions made upstream) to ensure transportation delivers supply chain excellence for their organizations.
Given that transportation managers are responsible for enabling excellence in transport operations, how should they proceed and get started? And how do they achieve the end state of having a transportation function that is fully assimilated and contributing to an overall synchronized supply chain?
To begin with, transportation managers need to personally understand where and how transportation impacts supply chain performance, and they need to educate their supply chain peers on what impacts transportation the most (remember those cost statistics cited earlier). “I didn’t know” is probably the biggest single cause of not excelling. So how does a transportation manager fulfill his/her role as an enabler of excellence to the fullest? Consider these things:
If you are a Retailer or Wholesaler, what is the transportation manager’s role in designing an omni-channel strategy? Is it more than providing estimated transportation rates by mode for each prospective ship point? Yes. They must also support, for example, the Marketing Department and understand the company’s customer segments and e-commerce strategy.
And what is the transportation manager’s role in effectively supporting a global sourcing strategy? Is it more than just calculating landed cost and measuring supplier compliance with ready-to-ship and complete orders? Yes. They must also work with their Sourcing Department to provide input on mode selection, risk management, and appropriate sourcing terms.
And what is the transportation manager’s role in working with Product Management to evolve from product and package designs for marketability and production toward designs that also incorporate “ship-ability” considerations? The further they can work upstream with functional areas such as Product Management and Packaging Engineers, the more they will enable excellence in the delivery of products downstream.
As important, what is the transportation manager’s role in collaborating on the design and implementation of customer shipping programs? Is it more than ensuring dwell time is minimized at pick-up and delivery? Yes. They need to participate in sales and operations planning to properly forecast and budget transportation needs. And what operational strategies should transportation be putting forth in their companies to best anticipate the unfolding digital world? Is it as simple as identifying all historical deliveries less than x distance from the ship point and less than xx lbs. that could ship via drone?
If transportation is to continue to be the great enabler of supply chain excellence, it’s time to go beyond just thinking about capacity and rates in a silo and proactively start working with internal and external supply chain peers further upstream and downstream in the company’s supply chain. This will help companies compete more effectively in a complex and changing market and ensure optimized cost and service outcomes.
Side note: I am serving as the Transportation Track Co-chair at this year’s CSCMP Annual Global Conference (September 27-30 in San Diego). I encourage you to attend the sessions in this track, which have been designed expressly to answer many of these questions and ensure transportation is the great enabler of supply chain excellence.
Lisa Kerr is Director of Commercial Intelligence for LeanLogistics, Inc. In this role, she gathers and assimilates supply chain industry and market research to inform corporate strategy, solution development, and commercial effectiveness. She gained experience through supply chain roles at Steelcase Inc. and Procter & Gamble prior to joining the team at LeanLogistics.