Transportation executives have always been tasked with developing annual strategies and execution plans. And since the transportation market is cyclical, with swings in demand and capacity, every year presents new challenges. 2023 is no exception. The difference now, however, is that CEOs and CFOs are more interested in what’s happening in the market due to the supply chain shocks of the past three years. Considering this, what should dominate the transportation management agenda today? That is the high-level question addressed in Descartes’s 7th Annual Global Transportation Management Benchmark Survey, which I discussed with Chris Jones, Executive Vice President, Industry and Services at Descartes Systems Group, on a recent episode of Talking Logistics.
Key Survey Findings
I began our discussion by asking Chris to share some of the key findings from this year’s survey. Chris explains that one aspect of the survey examined why two companies who implement the exact same system may have very different results.
Chris notes that while one company may have great results, another may have far less impact even though there was nothing wrong with their implementation. “What we found was that management’s perceptions of what the system could do for them had a major impact on results,” he says. “If management believes that transportation is important, they really do push the envelope [on driving change and innovation] and they perform better financially as well.
“Another factor was how well the company was doing financially, because that changes how aggressive they are. Those companies who were more aggressive in making changes during the pandemic typically saw more impact from their implementations.”
Cost and Capacity
Now that the market has swung toward relatively lower costs and greater capacity, I asked Chris what is top of mind for transportation executives. Chris notes that the driver shortage continues to be the top concern and will likely be so for the next five years or more. “But costs and capacity still came in at numbers two and three.”
Chris goes on to explain that what is most on executives’ minds now is resiliency. Even though capacity has improved, it is still cyclical and they want to do things now to make sure they will have capacity when they need it down the road. “While they have some breathing room at the moment, they remember getting burned in the recent past and that makes now the perfect time to put capabilities in place to be better prepared in the future.”
Metrics Matter
I next asked Chris if the survey found any changes in the metrics companies are using to measure results. Chris comments that companies are still using the traditional metrics of cost and service, including On-Time In-Full. “Because those are the basics, you don’t get any credit for hitting those.
“What is interesting are new metrics around transportation’s contribution to revenue and competitive differentiation. If you’re able to measure those you start to see where the value is. What was really clear in the survey was that companies who were top performers and who felt transportation was important were way ahead in those two metrics.”
Looking Down the Road
Another aspect of the survey I explored with Chris is what transportation management capabilities companies say will be most important over the next few years. Chris states that visibility continues to be critical, but even more so in areas such as for overseas shipments. “Are the shipments clearing customs? Are there potential problems? This can impact inventory management, as well as manufacturing plans.
“Other areas of focus are order management from the standpoint of what is coming down the road to plan for, and performance management and business analysis. Transportation generates so much data and you can learn a lot about things such as customer behavior — are they there to receive shipments, how much detention is there, for example, as well as learning what your carriers are doing. This is coming together with the rise in very sophisticated yet easy to use analytic platforms.”
Chris also had some great comments on how visibility to sustainability metrics intersects with costs and service, and shared what investments the survey found were on executives’ radar going forward. Therefore, I recommend that you watch the full episode for all of his insights and advice, and also download and read the 7th Annual Global Transportation Management Benchmark Survey. Then keep the conversation going by posting a comment with your questions and perspective on this topic.
