Executive Briefings

Enabling the Responsive Supply Chain

Analyst Insight

Companies often fall victim to thinking that they can have a greater measure of control over international shipments than is really feasible today. While it is possible to achieve a measure of performance improvement through service level agreements and "strong-arming" carriers and suppliers, there are limits to this strategy. Weather events, customs delays, and bottlenecks at logistics hubs make unforeseen delays inevitable. Best-in-class companies recognize this reality, and have adopted a strategy of agility and responsiveness in order to still meet their supply chain goals.  The cornerstone of the agile supply chain is visibility--both of inventory in transit, as well as the market events which will impact the on-time delivery of that inventory. When these two pieces of information are visible on the same platform, then unexpected events can be rapidly assessed and resolution plans can be quickly developed and implemented.
-Ian Hobkirk, senior analyst, Supply Chain Execution, AberdeenGroup

In contrast to domestic transportation management, which is more highly automated, companies of all maturity levels are still predominantly using manual processes to manage their international freight. However, Aberdeen is seeing companies beginning to take a greater measure of control of this area of the supply chain as well. Rather than "boiling the ocean" and launching a wholesale change to their entire overseas processes, companies are taking more of a piecemeal approach-picking key aspects of global logistics that have a high ROI potential if automated, and building out these processes first. For example, companies may take on a project involving global visibility, transportation procurement, or global trade compliance, rather than a making a complete switch to a new platform for facilitating international transportation management.

Some innovative strategies being adopted by companies today include:

• Transportation Procurement/Bid Management: Best-in-class companies are more likely to use sophisticated tools to manage the bid process. Bid management tools strike the right balance between achieving an "apples-to-apples" bid from each provider, with the need to allow vendors the ability to creatively structure their bid to highlight certain areas where they may be much more competitive than others. Best-in-class companies are 40 percent more likely to use these tools than their peers.

• Dynamic Routing: This capability allows a company to move beyond static routing guides and determine the optimal trade lane to use on a load-by-load basis. For instance, instead of always routing freight from Hong Kong to Long Beach, and then by truckload to Chicago, a company can quickly compare rates and transit times from several different hubs. It may be less expensive or faster at certain times of the year or for certain volumes of cargo to ship from Shanghai to Seattle, and then via rail to Chicago. Best-in-class companies are 63 percent more likely than their peers to practice automated Dynamic Hub Routing (either internally or through a managed service provider).

• Re-Route in Transit: This is the ability to assess the impact of a delay in one segment of a multi-leg shipment on the remaining segments of that shipment, and predict whether or not the critical final delivery window can still be hit. It further involves re-routing the remaining legs of the shipment to compensate for the delay.

The Outlook

International Transportation Management-A Competitive Differentiator. Today, only a handful of Tier One software providers offer the capabilities listed above. However, a number of innovative, newer companies have made significant strides in carving out niches for themselves in domestic transportation management. These companies will begin to branch out into international logistics as well, putting this level of functionality in the hands of the small to mid-sized shipper. At the same time, larger technology providers will begin to offer "one-stop-shopping", providing applications to manage both global trade compliance, and transportation procurement and payment.

Analyst Insight

Companies often fall victim to thinking that they can have a greater measure of control over international shipments than is really feasible today. While it is possible to achieve a measure of performance improvement through service level agreements and "strong-arming" carriers and suppliers, there are limits to this strategy. Weather events, customs delays, and bottlenecks at logistics hubs make unforeseen delays inevitable. Best-in-class companies recognize this reality, and have adopted a strategy of agility and responsiveness in order to still meet their supply chain goals.  The cornerstone of the agile supply chain is visibility--both of inventory in transit, as well as the market events which will impact the on-time delivery of that inventory. When these two pieces of information are visible on the same platform, then unexpected events can be rapidly assessed and resolution plans can be quickly developed and implemented.
-Ian Hobkirk, senior analyst, Supply Chain Execution, AberdeenGroup

In contrast to domestic transportation management, which is more highly automated, companies of all maturity levels are still predominantly using manual processes to manage their international freight. However, Aberdeen is seeing companies beginning to take a greater measure of control of this area of the supply chain as well. Rather than "boiling the ocean" and launching a wholesale change to their entire overseas processes, companies are taking more of a piecemeal approach-picking key aspects of global logistics that have a high ROI potential if automated, and building out these processes first. For example, companies may take on a project involving global visibility, transportation procurement, or global trade compliance, rather than a making a complete switch to a new platform for facilitating international transportation management.

Some innovative strategies being adopted by companies today include:

• Transportation Procurement/Bid Management: Best-in-class companies are more likely to use sophisticated tools to manage the bid process. Bid management tools strike the right balance between achieving an "apples-to-apples" bid from each provider, with the need to allow vendors the ability to creatively structure their bid to highlight certain areas where they may be much more competitive than others. Best-in-class companies are 40 percent more likely to use these tools than their peers.

• Dynamic Routing: This capability allows a company to move beyond static routing guides and determine the optimal trade lane to use on a load-by-load basis. For instance, instead of always routing freight from Hong Kong to Long Beach, and then by truckload to Chicago, a company can quickly compare rates and transit times from several different hubs. It may be less expensive or faster at certain times of the year or for certain volumes of cargo to ship from Shanghai to Seattle, and then via rail to Chicago. Best-in-class companies are 63 percent more likely than their peers to practice automated Dynamic Hub Routing (either internally or through a managed service provider).

• Re-Route in Transit: This is the ability to assess the impact of a delay in one segment of a multi-leg shipment on the remaining segments of that shipment, and predict whether or not the critical final delivery window can still be hit. It further involves re-routing the remaining legs of the shipment to compensate for the delay.

The Outlook

International Transportation Management-A Competitive Differentiator. Today, only a handful of Tier One software providers offer the capabilities listed above. However, a number of innovative, newer companies have made significant strides in carving out niches for themselves in domestic transportation management. These companies will begin to branch out into international logistics as well, putting this level of functionality in the hands of the small to mid-sized shipper. At the same time, larger technology providers will begin to offer "one-stop-shopping", providing applications to manage both global trade compliance, and transportation procurement and payment.