What is transportation management?
Freight transportation is a subset of logistics management. Transportation 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. But many companies overlook the importance of transportation management.
What are the benefits of transportation management?
TMS Logistics & Visibility
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 stored 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 while hurting customer satisfaction and loyalty. Creating effective inventory flow through transportation avoids damage caused by the disruption.
Consumers are more and more aware of what it is they’re buying and what ideals a company subscribes to. Also, transportation is an emission-heavy industry. Customers want to buy from companies who take social responsibility seriously and work hard to reduce their carbon footprint and minimize their energy consumption. Having inefficient transportation processes increases these environmentally-hazardous processes. Also, it can make a product unappealing to a customer due to the harm that comes with it.
Preferred Shipper Status
The ATA estimates the transportation industry is currently short 48,000 truck drivers. This shortage is expected to grow to 239,000 by 2022. A truck capacity crunch is due to 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, such as short dwell-times and long tender lead times, will be a preferred shipper and have an easier time finding capacity because carriers will want to work with someone who boosts their efficiency. Having access to reliable capacity in the coming years can save logistics costs. Additionally, it can continue to provide a high level of 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 have a very negative view of this company and will likely not use their services again. Last mile logistics, the last stretch before delivery, is complex, costly, and it is often this part of the delivery that causes disruptions and delays. Proper management of transportation can ensure high delivery performance and consistent customer satisfaction. Therefore, the importance of transportation management is hard to overestimate.