You might need a specialist to conquer your greatest foe – transportation.
Those of us operating in the supply chain world are likely used to thinking of transport as synonymous with logistics.
However, in doing so, we’re missing a vital area for improvement in our overall supply chain.
If we can see transportation as one facet of logistics, we can home in on it as a distinct part of the chain. We can bring about efficiencies that will serve the chain as a whole. We know logistics as a whole have undergone a seismic shift over the last decade due to advances in technology.
“Logistics as a whole have undergone a seismic shift over the last decade due to advances in technology.”
But what if we look at how to improve transport specifically?
Transport – taming the beast
The old-school issue with transportation within the supply chain is that it was a loosely governed, not very visible endeavor, yet ate up as much as 70 percent of all logistics costs. Whether transporting parts or the finished products, we’d wave off our wares and hope they’d turn up in the right place, at the right time, in the right way.
That’s a whole lot of luck being pinned on the process.
In many ways, transportation within the supply chain was a law unto itself. Not governed in the same way, with the same fine tuning, as the factory floor, for example. It was often a highly distinct being, away from the main tenets of the chain.
The modern supply chain simply cannot function with a beast in its ranks anymore.
The U.K. has the seventh-highest fuel costs in the world, and transport is one of the supply chain’s biggest expenses. The margins for efficiency savings are now so fine – with customers more in control and with higher expectations – that we can’t afford to leave the transportation element to luck.
How to improve transport in logistics
Knowing we need to improve transportation is one thing. Knowing how to accomplish this is another. After all, we can only work with the infrastructure we’ve got. We need to get our goods from Point A to Point B cheaply and reliably, without a sacrifice to either. Making efficiencies here can be the difference between thriving or falling behind competitors.
The single biggest way to improve transportation is to improve its responsiveness.
“The single biggest way to improve transportation is to improve its responsiveness.”
However, this is where technology can be used to your advantage.
Through technology, it is possible to increase visibility – the foundation of improvements. If we can see what is going on with our products from the start of the chain, through every transportation process within, then we can pinpoint where efficiencies are possible.
Think of this in terms of inventory management alone. With increased visibility, inventory management can be more finely tuned. Uncertainty can be managed.
How do we do this? Well, either we utilize tracking, routing and dispatch-technology solutions, or we develop our own. The return on investment is always worth the initial outlay.
Alternatively, we can take a different route altogether and realize that transportation as part of logistics is a specialist area in itself. The simplest way to tame the beast is to outsource it to precisely that: a specialist.
Outsourcing transport – routing and optimization
The reality is that transportation hits the supply chain hard in terms of costs, and is an unwieldy beast to manage. Outsourcing, contrary to what you may initially think, actually puts you back in control of the costs and the beast itself. This is most true in the field of routing and fleet optimization.
Very few businesses are truly big enough to maximize efficiencies by bringing their transportation in-house. Capacity, load configuration, customer expectations – none of them allow for that. The numbers simply don’t add up.
The ultimate goal of transport routing is to minimize route time or distance, while maximizing vehicle fill and reducing assets.
“The ultimate goal of transport routing is to minimize route time or distance.”
Seeking expert consultancy can be an efficient first step toward improvement, as these firms have their own tools and strategies, as well as access to specialist third-party software, which creates the most efficient transportation operation. You get all of the benefits of insight, with improvements that reverberate up the chain.
What else can we do to improve transport in logistics?
Outsourcing is the single biggest way of moving the transportation yoke from around the supply chain’s neck. Understanding this concept will help you realize how outsourcing creates a valuable return on investment.
Technology is the big whammy. The refined and top-of-the-range tools and software to create efficiencies in the transport area are sophisticated and continually evolving. They offer visibility that brings control and the ability to optimize. Supply chains have been somewhat slow to embrace technology in transportation, but consultancies have realized their potential in real terms.
By understanding the way we handle transportation, we can quickly make greater improvements. If we are frequently shipping small parcels that don’t fill trucks, or other freight means, then we’re paying for wasted space. By changing routes and considering different transport modes, we can solve this problem.
Similarly, how much air are you paying to ship? If your packaging isn’t the right size for the job, you’re effectively paying to move air. Given that much in transportation is now charged by size, you simply can’t afford to use bigger packages than necessary. It may be worth considering on-demand, die-cut packaging.
It’s also important to consider how you might move Good X from Point A to Point B (your warehouse) before sending it on to Point C (the customer). Is it possible to cut out the middle stage and organize deliveries direct from source to customer?
Improving transport, improving logistics, improving the supply chain
When we examine transport as a distinct facet within logistics, then we can make even greater efficiencies throughout the entire supply chain. Outsourcing to logistics and supply chain consultants is an easy and cost-effective solution.
What tips do you have for improving transport logistics?
This article first appeared on All Things Supply Chain and was republished with permission.
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