As many companies are developing their transportation budgets and strategies for the coming year, is your company going to be one that is proactive in driving change and continuous improvement in 2025, or will you take a “let’s wait and see what happens” approach? What strategies are leading companies deploying to decrease transportation costs and improve service in 2025? What are the dangers of doing nothing in transportation management? These are some of the key questions I discussed with Mike Regan, Co-Founder and Chief of Relationship Development at TranzAct Technologies, on a recent episode of Talking Logistics.
The Transportation Market in 2025
When it comes to discussing the transportation market and where it might be headed in 2025 there is no better person to ask than Mike Regan, a CSCMP Distinguished Service Award recipient, who shares his perspective of industry trends and best practices via his newsletter and “2:00 Minute Warning” videos. So, I asked him to give us a quick overview.
Mike summed up the current state by stating that, “Companies are trying to reduce variability and achieve a level of certainty that allows them to intelligently run their business.” He adds that going into 2025, a lot of companies are guessing what is going to happen in their supply chains. Instead, there should be a focus on real-time, data-driven analysis and decision-making. “You need a fact-based supply chain,” he says.
The Cost of Doing Nothing
With the rate of change accelerating in supply chain and logistics, and the unknowns concerning the future, companies are prone to stay the course because they aren’t sure what actions to take. Mike says the biggest culprit is not asking the right questions. He says companies don’t know what their customers and suppliers want, or what their competitors are doing, because they haven’t asked the right questions. Therefore, they act on assumptions that are often wrong.
“The Dunning–Kruger effect is definitely in play in supply chains,” says Mike, which he explains in this short clip:
By doing nothing, or doing the wrong things, they are allowing their competitors (who are asking the right questions) to redefine the market, which makes them more competitive. Mike cites the example of how Amazon redefined the ecommerce market by how they built their logistics network for fast, free delivery.
Control What You Can Control
There are many things companies can’t control in supply chain and logistics, like hurricanes and labor strikes. But there are plenty of things they can control, especially to manage their transportation costs and service levels more effectively. So, I asked Mike how companies can define and manage what they can control.
Mike notes there are external factors such as carrier rates that you can’t really directly control. But internal strategic decisions can have tremendous impact on costs, efficiencies, and processes. For example, if you’re putting small items in big boxes, carriers are making you pay for that. Mike also highlighted the move to density-based pricing in the LTL industry next year, which will be “the most significant change in the LTL sector in 40 years.” Watch the short clip below for more on this topic.
Mike argues that companies tend to spend too much time looking at how supply chain issues affect cost and not enough time examining how they impact their balance sheets and income statements. For example, have they stratified their customer base into A, B and C customers and adjusted their service levels accordingly? That can impact income and balance sheets.
This gets into the area of “speaking the CFO’s language.” If you can identify in dollar terms what waste is costing you or how much revenue growth a certain investment can provide, then you have their attention. As one example, Mike asks “Do you know the value of one day’s inventory to your company, because if you do, you can quantify in dollar terms what a supply chain disruption or opportunity would cost.”
Dynamic Adjustments
How you did things five or ten years ago should not guide how you run your business tomorrow or next year. The market and your company are too dynamic for that to be effective. Mike recommends shippers talk to their suppliers and carriers to identify how their strategies are changing and how you can work jointly to achieve each other’s goals. “If you aren’t asking those questions, you’re leaving yourself exposed and you don’t know the potential cost of that exposure.”
Partnering for Success
Mike notes that in a survey of 3,000 supply chain executives on where their company ranks on a scale of 1 (worst) to 5 (best), 85% said they were three or lower. Yet many say they are too busy to work on improvements. Mike asks, “If you don’t have time to work on your health, how are you going to have time to recover when illness strikes?” If you want to improve as a company, “you have to invest, you have to get the right people, and it has to be a priority.”
As you might guess, Mike and I covered a lot of ground in our conversation, far too much to summarize here. Therefore, I highly recommend you watch the full episode for all of his insights and advice on how to position your transportation management operations for success in 2025 and beyond. Then keep the conversation going with your questions and comments.
