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Transportation is the number one concern in supply chain management.
When managing your supply chain, Transportation is often the number one concern. Consider first, the level of expense involved as transportation is a major component in the calculation of Cost of Goods sold. In some cases, it can be the largest component, exceeding the cost of the labor and materials that go into the product itself. Raising fuel costs, reduced driver availability, and the increasing levels of security being required, all conspire to increase cost.
Then consider the role of your consumers. Consumers at large are experiencing levels of service that they never dreamed possible just a few years ago. Amazon.com, and companies like them, created a whole new level of expectation with a policy of sending you a message telling you when your order would be shipped, sending you another message telling you when it was shipped, then providing you with the capability to track it through the process of arriving at your doorstep. It did not take long for people to expect the same level of service as they transitioned out of their personal and into their corporate rolls.
Given these two forces, higher operating costs and increasing levels of expectation, there is little wonder that companies in all markets are looking for ways to improve their levels of operation.
Here is a list of what constitutes best practices in four areas that have a direct impact on transportation cost and the level of service you can provide.
THE COST OF THE SHIPMENT ITSELF
Automatically shop for the best rate that will support the level of service your customer expects.
Look for opportunities to balance cost, expected arrival time, and the methods of shipment available, i.e., surface vs. air.
Look for LTL shipments that can be consolidated into TL.
Are there individual parcel shipments that can be consolidated into one shipment (zone skipping)?
Is there an opportunity to reduce deadheading by combining outbound with inbound shipments?
Turn your shipping department into a profit center by maintaining separate Actual vs. aCharged freight tables.
Pass the audit burden back to the carrier by automating the rate and pay process.
Remember, the goal with freight is to spend only as much as you have to in order to meet your customers needs.
THE AMOUNT OF TIME THAT IT TAKES TO SHIP.
Automate the transfer of order pick information directly from the ERPs Sales Order Management system.
Make sure that the goods are packed right the first time, with the correct inners, outers, and containers.
Create documentation that is complete and in the format that is required for that customer.
Schedule the pick/pack operations to coincide with carrier availability.
Once an order is accepted, any delay in getting it out the door can only be made up by choosing a more expensive mode of transportation.
If you are shipping to or from a market that is outside your home country, there is another whole set of issues that can effect the cost and length of time your shipment will take.
You must ensure that the shipment of that product to that customer will meet all applicable compliance laws before the shipment is packed.
All of the required documentation must be prepared correctly, and automatically delivered to the right parties in hard copy, fax, or email, as most appropriate.
You should be able to take advantage of Preferential Trade Agreements and Export Refunds by having access to a bill of materials at the item level.
Any Letter of Credit must be managed to avoid overruns and the inherent delays/additional charges due to normal clerical discrepancies.
Documentation and compliance checks should be rule-driven so that the appropriate level of attention is focused where most needed.
A complete audit trail must be maintained to document the circumstances around every exception.
Not executing international shipments correctly can impact more then just your transportation costs it can also result in substantial fines, the loss of export privileges, or even prison sentences.
IMPROVING THE LEVEL OF SERVICE
Always ship the way that your customer has requested, be that based on lowest cost, best performance, or named carrier.
You and your customers should be able to access shipment status based on the PO number, Sales Order number, Invoice number, or Carrier Tracking number.
Have access to the carriers website from within your transportation management system.
Be able to provide your customers and suppliers with the appropriate level of access to your system to get the information they need.
Information about the status of a shipment has to be readily available up and down the supply chain. With advance information, your suppliers, your customers, and even your own company, will be in a position to better schedule their operations.
ACHIEVING BEST PRACTICE IN GLOBAL TRADE & TRANSPORTATION
Precision Software has over 900 customer sites in 55 countries around the world that are achieving these best practices in their transportation operations.
Precision Softwares single platform solution, TRAXi3 is an open, integrated and middleware enabled system. TRAXi3 manages all aspects of international & domestic trade by providing multi-carrier shipping & transportation management, international trade logistics, regulatory compliance screening and freight bill audit & approval capabilities from one system. Its seamless integration with leading enterprise resource planning (ERP), best of breed warehouse management systems (WMS) such as Oracle, SAP, QAD, RedPrairie, Catalyst International, Swisslog and legacy systems, ensures that TRAXi3 moves your goods & your bottom line.