Best practices for shippers

Oct 01, 2005 9:30 PM  By

As competition for carrier resources becomes more intense, shippers that develop effective programs in collaboration with carriers are most likely to get the rates and services they require. Best practices that shippers should implement include the following:

  1. Centralize command and control

    Carriers prefer a single point of contact with a shipper. Create a “command center” to manage all interfaces with carriers, and install a common platform to coordinate shipments across divisions or independent business units to maximize equipment use and take advantage of volume savings.

  2. Specify your requirements weeks in advance

    It is important to give carriers as much notice as possible of pending volumes — particularly unusual volumes, such as promotional events or seasonal volume spikes — to avoid paying for last-minute premium freight. Convert sales or manufacturing forecasts into transportation capacity requirements and convey this information to your carriers. This allows them to properly allocate networks and resources to serve those needs. (It is equally important to communicate any changes in plans to your carriers.)

  3. Plan for transportation at the order fulfillment stage

    Transportation capacity can no longer be viewed as an infinite resource. In a traditional order fulfillment process, transportation is the last stage after the order has been approved, processed, and filled. But you’ll be several steps ahead if you plan transportation for purchase orders (POs) and sales orders ahead of fulfillment. Before transmitting the PO to the vendor, tender to carriers, book transportation, and include the pick-up date and carrier information on the PO. For sales orders, plan for transportation along with fulfillment, not after it. This will allow you to notify your carriers days sooner and reserve critical capacity.

  4. Reduce carrier dwell time

    Ensure timely and expeditious loading and unloading; using a self-service appointment scheduling system can help immensely. Monitor all delays and work with carriers and their trading partners to set up a continuous improvement program.

  5. Create incentive-based contracts

    Many carriers contract with shippers in good faith only to find that the agreed-upon preferences and volumes are not delivered. Build those agreements into your transportation planning system so that it allocates shipments based not only on lowest cost but also on adherence to contract volumes.

  6. Pay carriers faster

    Many carriers operate on very thin margins, and one way to help them is to pay them on a timely and dependable basis. When the timing of payments varies widely from period to period, the carrier cannot plan for income and may borrow unnecessarily. Best-in-class shippers are instituting self-billing processes and paying their carriers rapidly and correctly.

  7. Develop report cards

    Performance measurements aren’t just for carriers — it is important to measure your operation’s internal performance as well. Craft a holistic view of your loads’ life cycle from forecast to delivery, and measure actual results against the forecast. Measure other trading partners’ performance and hold regular reviews to identify and fix problems.

Peter M. Stiles is vice president of strategy and marketing for LeanLogistics, based in Holland, MI. This article is adapted from “Navigating Transportation’s ‘Perfect Storm,’” which appeared in the Council of Supply Chain Management Professionals newsletter Supply Chain Comment, Vol. 39, July/August 2005. (c) Copyright 2005 Council of Supply Chain Management Professionals.