20/20 Vision Needed For Transportation Optimization
April 3rd, 2011 8:28 pm Category: Carrier Bid, Supply Chain Improvement, Ted Schaefer, Transportation, Transportation Procurement, by: Ted Schaefer
When you slice up the supply-chain into its different components, one of the highest areas of expense, and an area that many companies struggle to comprehend and manage, is transportation. Why is it, that for many otherwise sophisticated companies, no one within the organization is held accountable to know what they spend on freight, where they spend it, why they spend it and how they can change it?
A recent transportation survey conducted by Profit Point shows 75% of our survey respondents continue to struggle with the trade-off between adding carriers to reduce costs, and limiting the total number of carriers so they can be effectively managed for safety and service. Probably the most surprising finding for me was that one out of every four respondents was unable to confirm whether or not their most recent improvement projects in the transportation arena had any impact. Wow! One quarter of transportation managers can’t measure whether their efforts made a difference. In this uncertain economic environment where every penny counts, I think we should expect more from ourselves.
Another find – only 30% of respondents had been out in the market with a bid over the previous 12 months. At a time where shipping volume is picking up and carriers are becoming more aggressive with pricing, it seems we should be very close to the market to make sure we’re paying the right amount for our freight. With less than a third of shippers out in the market with a bid over the last year, how can we be sure that the price increases being proposed by carriers are reasonable?
Transportation continues to be a significant portion of the total supply chain cost, therefore for many companies, the single most significant area to focus cost reduction attention. Have we lost our vision? Is it time for a new pair of glasses? Our survey seems to suggest it. If you have been anointed as the Czar of transportation for your company, then you need to be in touch with the market and confident that the changes you implement are having a meaningful impact on the bottom line.
You can download the report by clicking the link below:
