Transportation is in the midst of change, but it’s unclear how its benefits or disruptions will affect processes, shippers, customers and providers.
A recent Logistics Managers Index (December 2018) demonstrated significant change, volatility and uncertainty in highway transportation prices, capacity, and utilization. Shippers and carriers are especially sensitive: they expect more disruptions from driver shortages, the electronic logging device (ELD) mandate, increased volume, insufficient truck supply, rising driver and shipping costs, and continuing mega-shifts in retail and industrial distribution.
Though today’s outlook is not quite a perfect storm, this volatile environment will test new ideas and separate U.S. transportation leaders from laggards. Although we hear aggressive forecasts of visionary technology, most are beyond the practical horizon. There are only a few actions that will build breakthrough competitors over the next five years.
The essence of these characteristics is clear, but leaders will be the few who can nail each challenge/opportunity.
Be a transportation strategist. Become a preferred shipper. Help your carriers become more efficient: schedule pickup and delivery seven days a week, extend transportation hours (early morning or late afternoon/evening pickup and delivery times). Redesign product packaging for more shipment density. Introduce more effective order quantity rules.
Match standards for effective controls. Organization structures tend to drive operational controls, but leaders break out by cross-referencing key measures. For example, optimizing profitability rather than minimizing costs and maximizing sales; or keeping transportation equipment full and moving, rather than controlling trip rates, driver hours, packaging costs, etc.
Utilize actionable information. Access the internet of things, your transportation competitors and providers, your transportation management system, association information, and your telephone. Take advantage of junior resources that supplement your team with access to cutting-edge technology and resources.
Build creative alternatives. Ask “why not?” whenever possible. Regard in-transit inventories as available for delivery. Cluster distribution locations and consider shared safety stock in decisions. Be especially sensitive to sourcing and transportation alternatives, including distributors, suppliers, salespeople, and competitors. Ask your customers (you may be positively surprised at their flexibility).
Orchestrate integrated scheduling. Never forget that a timely, effective delivery depends on procurement, scheduling, inbound transportation, manufacturing/assembly, packaging, inventory, facilities, communications, marketing, sales, order entry and approval, quality control, picking, packing, outbound shipping, delivery, and customer service. Today’s tools can cover all of these activities, but it’s critically important to know how they fit, how well they are getting each order completed, and what the results must and should be.
Guarantee rapid delivery. Consider as models processes used for medical, technical and entertainment distribution, as well as guaranteed overnight delivery providers and users. Optimize the entire shipping process, including every aspect of transportation and related functions (network, freight movements, shipments/rates, contracts, decision-making process, constraints, calendar and clock limitations).
Consistently use transportation as a competitive weapon. Every day, leaders do smart things. For example:
It is virtually impossible to compete nose to nose with Amazon, but many distributors and retailers find that fulfilling Amazon orders and using Amazon shipping resources can be effective and profitable alternatives.
Leaders creatively identify new sources of drivers, such as immigrants (from Romania, Yugoslavia, China, Japan, Russia, and India) or military veterans, and they also build strong relationships with independent drivers.
Leaders never stop rethinking transportation issues
What differences do we see between tomorrow’s winners and losers in the U.S.? Winners see transportation as a competitive lever and manage to maximize long-term profit. Losers see transportation as a process and cost to be minimized. Winners are creative!
Most importantly, the winners in the next several years will use transportation to orchestrate the factors that make companies build breakthrough customer satisfaction, profit growth, and long-term continuity of spectacular results.
Robert Sabath is supply chain practice leader for Transportation and Logistics Advisers LLC.
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