Still dealing with uncertainty in 2020, supply chain and logistics professionals now face the tough challenge of planning for 2021. From COVID-19, wildfires and hurricanes to truck driver shortages and capacity concerns, many organizations are in constant disaster recovery mode.
Despite market volatility, supply chain executives must develop their logistics plan and transportation budget for 2021. One key strategy logistics professionals can use to stabilize operations and improve predictability is to formulate an annual network bid, then continuously monitor and update the routing guide.
Benefits of continuous routing guide optimization
Routing guides serve as a foundational element for transportation management. The route guide supports an efficient supply chain because it contains service requirements and capacity plans for manufacturers, suppliers and distributors when shipping products or materials to a specific location, warehouse or distribution center.
Route guides streamline the process for inbound and outbound logistics. For businesses looking to gain control over transportation costs and logistics decision-making, active route guide management offers benefits, such as:
- Defining key shipping information, rates, modes, service
- Increasing efficiencies by transforming supply chain from static to dynamic
- Enhancing communications and carrier collaboration
- Measuring compliance and managing chargebacks
Enhancing routing guide reliability
Here are three action steps to ensure the stability and predictability of your 2021 routing guide:
1. Engineer your bid to best fit your network
Ensure your routing guide contains an accurate picture of the capabilities and capacity of your carriers and logistics partners. For example, our engineering and consulting teams offer strategies for low-volume lanes, pre-negotiating lanes, seasonal bids and overall carrier award strategies. We are advising clients on Rapid Response Routing Guides, which means actively monitoring the marketplace and making adjustments to meet their changing needs.
Analyze performance reviews of your current carriers and communicate areas for improvement. Discuss your business strategies and any shifting priorities to ensure your transportation partners can meet your needs now and in the coming months.
A third-party logistics (3PL) provider is uniquely suited as a matchmaker for shippers and carriers. A 3PL can assist in gaining capacity, creating efficiencies and establishing a more carrier-friendly routing guide. For example, our consultants support our clients during the RFP process, ensuring the logistics plan is optimized with appropriate capacity allocations to minimize costs.
2. Examine performance and plan for flexibility
Take advantage of optimization technologies included in transportation management systems (TMS). The user-friendly and dynamic dashboards provide real-time network visibility and shipment tracking. A robust TMS will allow you to establish guard rails and alerts when certain lanes are out of specifications.
A logistics service provider with a large network of freight under management can fill in capacity gaps and support multi-shipper collaborations and improve capacity and logistics cost management by eliminating deadhead and wasted miles through dynamic continuous moves.
3. Establish compliance and benchmark reporting
Instituting metrics and key performance indicators (KPIs) in collaboration with your logistics partners ensures compliance with your routing guide. Consistent review of KPIs allows shippers and carriers to quickly adjust to changing circumstances.
Another resource is performance benchmarks. To illustrate, we provide a weekly supplier performance benchmarking report to help shippers meet the delivery requirements set by major retailers. All participants are anonymously compared to other shippers participating in the program. With rich data from the TMS, the benchmark report identifies trends and opens opportunities for shippers to share best practices.
When the market is regularly shifting and unsteady, a well-designed routing guiding will create stability and predictability into your 2021 logistics plan.
Ben Cubitt is SVP of Consulting & Network Services at Transplace.