Freight transportation is a subset of logistics management. Transportation management involves moving goods from one location to another by any mode (air, rail, barge, maritime, or road). Transportation is an expensive and emission-heavy process, making it an ideal target for carbon footprint and cost reductions. Still, many companies overlook the importance of transportation management.
Transportation management system (TMS) Proper transportation management begins with a transportation management system (TMS). A TMS will automatically tender loads, track shipments, and gather and analyze historical performance data. This data, often referred to as big data, allows a company to see what’s happening in its shipping operations. Once visibility is gained into transportation operations, changes can be implemented to increase efficiency and customer satisfaction, reduce transportation spend, and optimize packaging or storage procedures that are harmful to overall supply chain goals.
Effective transportation management keeps a company’s whole supply chain running smoothly. With successful transportation execution, inventory can be kept lean and can be moved in and out of a warehouse quickly and efficiently. This improves warehouse efficiency, reduces overall lead time, and saves money on storage. Supply chain disruptions can be costly and hurt customer satisfaction and loyalty. Creating effective inventory flow with transportation management avoids damage caused by the disruption.
Consumers are more and more aware of what it is they’re buying and what values a company has. Also, transportation is an emission-heavy industry. Customers want to buy from companies who take social responsibility seriously, work hard to reduce their carbon footprint, and minimize their energy consumption. An inefficient transportation strategy will increase a company’s carbon footprint and their impact on the environment. It can also drive sales away from your products from the negative perception of your brand’s environmental awareness and impact.
The ATA estimates the transportation industry is currently short 48,000 truck drivers. This shortage is expected to grow to 239,000 by 2022. The truck capacity crunch is caused by the significant lack of drivers. Since there is much less trailer space to go around, shippers must compete to secure capacity. A company that has optimized transportation processes will be a preferred shipper and have an easier time finding capacity because carriers will want to work with someone who boosts their efficiency. Optimized transportation processes allow for short dwell-times and long tender lead times. Access to trucking capacity will lower logistics costs in the coming years. Additionally, it will continue to provide a faster and more reliable service for customers.
The processes in between procurement and shipping can be long and complicated, but out of all of these processes, transportation is the one where a company has direct contact with a customer. The point of delivery reflects the competency of the entire organization – if a company is constantly delivering products late, the customer will develop a very negative perception of this company and will likely not use their services again. Last-mile logistics, the last stretch before delivery, is complex, costly, and is often the part of the delivery that causes disruptions and delays.
Proper management of transportation can ensure high delivery performance and consistent customer satisfaction. Therefore, it is hard to overestimate the importance of transportation management. Learn more about our transportation management services! Analyze your transportation costs and identify ways to reduce inefficiencies and drive productivity.