In the supply chain industry, costs are unavoidable, it is simply part of the process. To maximize service at the lowest cost through process, technology and people, managed transportation service providers work to deliver transportation solutions. These solutions are an effective way to help you save costs. What are some of these solutions? In this article, Millennium Logistics Management provides 5 ways you can reduce your supply chain costs.
Process improvement is one of the first areas a managed transportation service will focus on. Forecasting, appointment scheduling processes and routing guides are part of a company’s standard operating procedures. Establishing alignment with carriers to create a competitive landscape, improve on time performance and establish accountability in capacity commitments is of great value and highly recommended. Other areas include transportation management system and business process flow, carrier engagement and a shipper’s internal processes.
An important part of running an efficient supply chain is the carrier relationship. A management transportation service provider will have more established relationships with carriers than one company will on its own. To evaluate how much money a company is paying a carrier for their lanes, leveraging benchmarketing data from the transportation management system is key. An attainment can be organized to establish a new routing guide if the amount is outside of current trending benchmarks. Since the market is impacted by so many fluctuating variables, it is important to always monitor the current indexes and carrier follow through.
To identify areas of the supply chain that can be optimized, analytics provided from a transportation management system can be of great help and value. A key area where transportation costs can be reduced is freight consolidation. Meaning, logistics professionals can identify opportunities to move smaller orders onto full truck loads. Also, consider inventory pooling as it increases the amount of product picked up at a location to decrease the number of stops to both drive cost out of the supply chain while increasing service levels.
There are a lot of efficient solutions the transportation management system can produce but these are just a few of the areas which should be specifically considered. Your transportation management system is of great importance; a good management transportation service provider will present cost saving solutions to the company but, a great management transportation service provider will integrate a productive tension into the relationship, respectfully challenging today and every day in pursuit of driving value over time.
A shipper may find it difficult to collaborate with other shippers outside their business on its own. However, for a management transportation service provider, this becomes easier through their relationships with multiple shippers and visibility into both supply chains. A management transportation service provider can offer visibility into potential solutions for shipper collaboration which will benefit both companies.
In respect to management of freight transportation, shippers who move toward management transportation service gain short-term tactical benefits of having standardized processes outsourced through a team of specialists. When considering the long term, shippers benefit from the strategic relationship by leveraging the productive tension which challenges their current constraints coupled with a transportation management system where data becomes knowledge.
How a company is transporting goods and if there are more cost-effective alternatives (whether based on current forecasts or lead time in orders) is another excellent area to consider. Things are constantly changing and what may work today, may not work tomorrow and with that in mind, a logistics professional will monitor business trends and make proactive recommendations as a shipper’s business changes. For instance, transportation spend can be reduced through fuel costs and per mile rates if a mode shift is attainable.
Reducing supply chain costs is very possible and while partnering with a management transportation service provider is a significant investment, doing so can produce a return within a year. Also, integrating a transportation management system program into your supply chain system will allow the logistics team to focus on identifying which areas need improvement. Finally, considering the 5 areas covered in this article will make an effective difference in your overall supply chain system.
For additional information on improving your existing supply chain system, contact Millennium Logistics Management. Millennium Logistics Management can look at single aspects of your supply chain or the entire supplier network and help you manage the new processes, or we can manage it for you!
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