Remote work, once considered a professional perk, has become a means of ensuring business continuity. Customers are being engaged from a distance. Telemedicine has gained prominence as a way to remotely access healthcare providers.
In addition, the way in which we purchase everyday goods has been radically transformed. We’re buying more online, with orders shipped directly to our doorstep. The “Amazon effect” has firmly taken hold, as evidenced by a more than doubling of online sales between July 2019 and July 2020, according to Adobe Analytics.
In this pandemic-stricken environment, the efficient movement of freight becomes increasingly critical to meet surging demand. In the spring of 2020, Odyssey Logistics & Technology Corp. commissioned an independent third-party firm to conduct a research study into trends in the logistics industry, now and in the future. More than 350 shippers, who collectively anticipate spending $60 million on domestic shipping in 2020, cited their three most pressing challenges:
Many respondents also indicated that a transportation management system (TMS) will play an increasingly important role in mitigating these challenges.
The need to maintain remote-work capabilities is expected to continue. Two-thirds of study respondents said they will continue to allow remote work after the pandemic. Furthermore, 65% of respondents said having a cloud-based TMS in place to access shipping operations has been “critical or very important” during COVID-19, and 56% plan to reassess the integration of cloud-based TMS.
Shippers’ customers expect to be kept informed of shipment status. In fact, 81% of study respondents said shipment-status notification is of utmost importance. Visibility is especially critical for cost management and compliance, with 45% of respondents intending to keep a closer watch on shipping visibility.
While COVID-19 has undoubtedly transformed logistics now and in the future, natural disasters such as hurricanes and wildfires also pose immense challenges for the supply chain. In such scenarios, it’s critical to have data that’s understood and useful. During Hurricane Laura, a TMS helped shippers react more proactively by knowing exactly where shipments or raw materials were coming from, when they would arrive, and whether they needed to pre-emptively order inventory in anticipation of shutdowns in impacted areas.
A TMS connected to the National Weather Service enabled county-by-county visibility into Hurricane Laura events, and overlayed with order profiles to create risk profiles and enable informed decision-making. In yet another example, Johns Hopkins University’s COVID-19 map enlisted a TMS to input and aggregate data at the county and city level, to mark virus hotspots that could impact shipments.
Risk Mitigation Gains Focus
Supply-chain disruptions are even more critical during a pandemic, impacting cost, liability, production, service and the customer experience. Shippers lacking a TMS found it more difficult to reach customers and provide frequent status updates when delays occurred. While only a third of study respondents were using a TMS and control tower when the pandemic hit the U.S., 51% indicated they would look to implement such capability going forward.
A TMS enables events to be tracked in real time, automatically triggering alerts when exceptions occur. In addition, a control-tower approach for tracking exceptions heightens visibility and allows for more effective allocation of shippers’ resources. In one instance, a TMS helped to mitigate risk from an expected downturn in gasoline consumption during the COVID-19 pandemic. Refineries were anticipating significantly decreased volumes, but with access to real-time data on actual demand, they avoided the need to reposition capacity and release some carriers.
In logistics operations throughout the country, budget cuts and reduced margins have put cost savings into the spotlight. Among study respondents, 61% expect to negotiate shipping rates in 2020, and 75% said they visit between two and 10 carrier websites weekly. Furthermore, 68% of respondents cited cost management as the number-one reason they implemented a TMS.
The application provides a logical framework for decision-making, with rules in place to govern milestones, provide exception reporting, and pinpoint areas for continuous improvement. Yet the process isn’t linear. One shipper saw a reduction in costs due to reduced volumes and excess capacity. Another shipper’s volume also dropped, but its costs went up because of a contraction in the carrier base. Moreover, external influences such as COVID-19 caused a wide range of companies to convert existing manufacturing lines to the production of hand sanitizer. That move drew bulk tanker trucks away to ship materials, further limiting capacity that was already tight pre-pandemic. Prior to COVID-19, experts were anticipating a market decrease of approximately 30% in medium- and heavy-duty trucks in 2020, but according to Frost & Sullivan, the number might actually drop by 50% compared with 2019.
Closing the Communications Gap
Communications with customers and carriers was a struggle before the pandemic, and ad hoc, decentralized efforts tend to suffer higher fail rates. Study respondents said communication consumes the most time in their operations by a two-to-one margin. Furthermore, communication with customers was the second-most-cited challenge faced in domestic shipping operations.
By gathering all supply-chain data into a central dashboard, it can then be distributed in a consistent format. As TMS providers continue to advance communications platforms, they will be exploring such innovations as layered technology and artificial intelligence.
Investments in technology and processes limit business disruption. TMS applications are becoming increasingly important tools for gaining efficiencies through automation, preparing for the future of a decentralized workforce, minimizing risk, and improving visibility, communication, workflow, safety and sustainability.
Charlie Midkiff is senior vice president of global managed logistics services, and Bob Boyle is vice president of North American managed logistics services, at Odyssey Logistics & Technology.
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