Growing Supply Chain Competitive Advantage

Supply chain competitive advantage continues to be a popular buzz phrase amongst transportation and logistics professionals. Years ago, Amazon found their competitive footing when they promised select products would ship for free and arrive at the customer’s door within 2 days. Fast forward and Amazon now owns the e-tailer space as the largest ecommerce site in the world, using their supply chain as a strategic lever to outperform competitors- especially when it comes to the last mile. Another supply chain success story is Walmart, now the largest publicly owned retail company in the world. Their supply chain competitive advantage began when they eliminated the middleman, and began working directly with manufacturers/ suppliers. They used smart technology to delegate the difficult, and expensive, task of inventory management onto suppliers. Suppliers became responsible for managing their own inventory in the Walmart warehouses, and they happily obliged. These strategies freed up Walmart staff to focus on other transportation projects, and generated massive savings which were (and still are) passed on to the end customer. Both examples are unique in their own way.  What remains constant in any company that has a supply chain advantage, is that the supply chain is fully optimized and has the ability to deliver goods faster- and cheaper- than the competition. Today, a company's supply chain can account for the lion’s share of its total spend. Profitability rests heavily on how the supply chain is managed and performs. It impacts every department across the company because it influences the end customer-- the main source of revenue. Gaining an advantage has become difficult because the supply chain has shifted from a...

Shippers, why are you still using brokers or spot?

I ask this question to shippers a lot, and when I say a lot, I mean A LOT.  The top five answers are on the board: I don’t have a choice when I need to move a load. I’m not sure, I think someone has a relationship with them. It’s the way we’ve been doing it around here forever. They are part of my TMS and our tender process. They provide good service And now my personal favorite... It’s convenient. It’s hard to believe that billions of freight and transportation dollars are on the line and the best solution is a broker, DFB or the spot market. Taking control and bringing the broker's capacity and service in-house- through technology- is the key, here is how you get there. I don’t have a choice when I need to move a load. Yes you do, however it means change. And change can sometimes be unwelcome. In order to survive, you and your company need to be adaptable. Investing in solutions which reduce friction and cost to enable you and your team to focus on the real issues, not spending the majority of your time putting out fires. The broker paradigm is not a fire extinguisher, it is a cup of water on a four alarm fire, and an expensive one at that. The issues need to be solved using a software solution that automates and eliminates the broker. Opening up the fire hose giving you direct access to millions of small carriers that brokers shelter and use, providing better service to your customers and eliminating the broker and the hidden margins. By eliminating the broker,...

Carrier Cost Is One of the Quickest Ways to Reduce Transportation Cost

Transportation costs continue to rise making it difficult for shippers to effectively manage their transportation budgets. Did you know that the top 3 transportation metrics are related to carrier cost? They are: freight cost per unit shipped, outbound freight cost as a percentage of net sales, and inbound freight cost as a percentage of purchases. These carrier costs play a crucial role in total transportation spend. One of the quickest ways to reduce transportation spend is to select the most cost-efficient carriers. Traditionally, shippers have relied heavily on contracted rates to move freight. But in today’s market, contracted rates are no longer a guarantee that the goods will move. In fact, contracted acceptance rates have fallen to all-time lows, forcing many shippers into the costly spot market. And you know what happens once a load hits the spot market, it becomes a feeding frenzy for the brokers. So how can shippers reduce transportation spend, even during extreme market conditions? First, they need to change their mentality from working with a select few carriers to working with a large network of carriers. Second, they need to leverage technology to become agile and cut out waste. Working with Multiple Carriers Working with multiple carriers mitigates risk, especially when capacity is tight and acceptance rates from your primary/ preferred networks decline. Plus, working with multiple carriers can drive down costs by fostering a healthy, competitive bidding atmosphere. Imagine the savings impact if there were 5 or 6 world-class carriers bidding on each of your loads in real-time. Not only would the cost drop, reducing transportation spend, but the shipper would gain inside knowledge on true market...

Truckload Pricing and Market Fluctuation

Once again, supply and demand have impacted truckload rates. Simply put, there are not enough drivers on the road to move US goods to designated destinations. The carrier shortage has been fueled by COVID, and new drug and alcohol testing protocols, leading to a capacity crunch. Capacity is the tightest it has been since 2018. Truckload pricing continues to grow, and some analysts believe shippers will experience rate hikes as high as fifteen percent in 2021. In order to attract more drivers, increased wages will be needed which will fuel higher truckload pricing. There can be major ramifications to a shipper’s transportation budget, such as overruns, when freight costs rise. So how can a shipper better navigate market ups and downs to avoid budget overruns? Unfortunately, the current way of sourcing capacity is static and was not built to effectively manage market fluctuation. The typical tender process uses a systematic waterfall process. When contracted carriers pass on freight, all subsequent choices become more expensive than planned. Without direct access to capacity, shippers will remain at the mercy of margin-hungry middleman brokers. A disruptive SaaS solution has eliminated the middleman, has opened up direct capacity and has provided 100% pricing transparency. The software is called Optimal Transportation Spend (OTS). OTS empowers Shippers to adjust truckload price dynamically, generating immediate truckload savings and keeping cost control throughout the process. OTS software users also obtain 100% pricing transparency for a single source of truth for truckload cost. To learn more, you can join our upcoming webinar, "Mitigate Capacity Crunch While Generating Savings", as a panel of experts discuss how technology is helping shippers manage market...