Sometime in the last half of 2018, the transportation market began to soften. In what felt almost like overnight, finding capacity wasn’t as much trouble as it had been for so many long, challenging months. Spot rates began to decrease a bit. The phones started ringing again with carriers or brokers offering their services. The shift began, and in procurement we saw an increase in bid activity that has continued into 2019.
Transportation Procurement: Things to Keep in Mind
Today, whether you’re managing procurement events or working with a partner that manages the service on your behalf, here are some things to keep in mind.
- Be realistic. With the opportunity we are currently seeing in the marketplace, there is opportunity to save money on transportation. However, don’t expect rates to get back to where they were a few years ago.
- Continue the conversation. All too often, when the market is tight, shippers talk about collaboration and partnership. Service moves to the forefront. But when the market relents, there is a tendency to focus on cost. Strong relationships and networks are built on partnerships that remain steady through the twists and turns. Whichever side of the discussion you are on, strive to focus on partnership. The long-term payoff is more valuable.
- Be fair. Look to save money, but acknowledge that at times, it is worth spending a bit more (while still recognizing savings) in order to keep an incumbent on a lane.
- Examine operations for ways to be more carrier-friendly, as well as to mitigate costs in other areas. Think of aspects that could be improved, as if you were having issues finding a truck today – even if you’re not. Continuous, incremental improvements have the potential to make a meaningful difference for your organization and partnerships.
Make Continuous Improvement an Ongoing Initiative
Exploring the continuous improvement point further, this effort really does have to be continuous. Try to fix issues once the market has flipped and it’s already too late. Here are suggestions for making this an ongoing initiative:
- Create a steering committee to look at supply chain issues continuously, with representatives from:
- Demand Planning
- Customer Service
- Listen to feedback and look for ways to improve problem areas:
- Set a cadence for feedback and evaluation of key areas with appropriate stakeholders.
- Create an action plan with milestones and measurements for improvement.
- Educate the organization on market conditions:
- Keep the conversation open, and alert leaders when issues are on the horizon rather than waiting until they happen, or until the impact is seen in quarterly financials.
- Mitigate budget considerations or adjustments by openly sharing concerns, with available data to support them.
Why wait? Going to market or not, it’s always the right time to cultivate partnerships, look within for improvement opportunities, and focus on continuously doing both to maximize value for your organization.
Tim Dalton is Director, Professional Services at BluJay Solutions.