Inbound Transportation Management and Control: Low Hanging Fruit and How to Grab It
Companies procure transportation services with specific carrier partners that both meet their requirements for price & service and have a solid understanding of the nuances of their business needs. Additionally, these companies establish business processes and rules of engagement to facilitate the efficient flow of information and material into and throughout their organizations.
To convey information internally and externally, companies have historically implemented the use of paper routing guides. These guides are prepared, printed and distributed several times a year and often require vendors to acknowledge receipt of the new guide, fax an acknowledgement and immediately comply with the new directives. Printing and distributing the guide to vendors is a nightmare, if anything has to change, it would involve the same process all over again. Once a company mails its guides, there is no ready method to insure that vendors had the correct information, until they started to see vendors were using carriers that were not approved. Because the process of distributing a routing guide and monitoring compliance is so costly, companies are reluctant to update their routing guide too often. This precludes companies from taking advantage of better freight rates and immediately reacting to changing market conditions.While basic practices see the routing guide as a static body of operating rules that speak to sales and purchase driven freight transportation matters such as carrier selection, routing, packaging and labeling, claims and credit, their primary form of communication was the “printed routing guide”. A weighty document that resembled War and Peace, it was published either semi-annually or annually. Because of its unwieldy size, lengthy preparation and printing time it was not unusual that at the time of its distribution, it was already outdated and required the collateral issuance of supplemental instructions. In an attempt to keep current, some companies issued supplements and revised pages, similar to tariff updates, throughout the life of the guide. As cumbersome and impractical as this process was for the issuers, it was at least as painful for the recipient. Neither buyer nor seller could timely deploy changes or even place the changes into a workable process. If getting the information out on time was impossible, it was equally impossible to take advantage of significant transportation opportunities that were literally available throughout the entire life of a shipment.
A routing guide should be looked upon as a collaborative resource that improves trading partner relations, management decisions and reduces costs for all parties as non-compliance with routing guides costs both vendors and their customers millions of dollars annually.To adjust to the conditions that exist today, manufacturers, distributors, and retailers have implemented web based routing guides either. A web based routing guide should enable companies to ensure that trading partners use the carriers, rates, services, business rules, and communications that are required to effectively manage their supply chain. It should empower users with real-time information and utilities to immediately execute decisions based upon current information. It should make this information visible, thereby providing a solid basis for decision-making. It should eliminate voids between the decision and the implementation of the decision and improve communications and relations between trading partners. It should share information in a real time environment given the ongoing challenge to drive down transportation and handling costs.People in general and management in particular, do not deliberately make mistakes. Non Compliance implies that a mistake has been made somewhere along the supply-chain. The most common causes of errors are inadequate and inaccurate data. A web based routing guide should be designed to address these issues. It should capitalize on what computers and people do best. Computers are excellent at handling data, but not so good at decision making. People are nowhere near as good at handling data but, excellent at making decisions if given the right information. A Web based routing guide gives decision makers the right data at the right time to allow them to make the right decisions. The right decisions made at the right time, increases service, improves performance, and eliminates non compliance. When creating a web based routing guide, consider the following:• In short order and with little effort, you should be able to make changes to your carrier assignments and rules of engagement (routing guide) and instantly, automatically inform all vendors / customers / employees of the change. • It should provide constant contact with vendor and customer requirements and the ability to adapt these changing requirements by making and affecting instant changes while simultaneously notifying all users. • It should enable companies to maintain a manageable number of delivering carriers to maximize efficiencies of the freight receiving process. • It should enable users to simplify the distribution process and concurrently leverage all shipment volumes to improve compliance and drive down transportation costs. • It should empower users with real time information and the ability to make and execute decisions without delay. • It should provide greater flexibility in defining transportation instructions and take advantage of short term opportunities offered by its carriers. • It should be easier for shippers to comply with routing instructions by eliminating paperwork, • It should improve communications as it should serve as the mechanism to convey all of your logistics requirements to your vendors, customers and DC's. ConclusionThe most valuable use of a routing guide is to allow you to gain control over inbound shipments by getting vendors to comply with routing instructions while web based routing guides promise timely information, easy distribution, and widespread access. In either instance, these can serve as a simple, cost effective way to gain control, improve the management and drive down direct and indirect costs associated with inbound transportation.To gain a better understanding of the rules of engagement and to learn how many of the world’s leading corporations have improved control and management of inbound transportaton, simply click on the following link: RoutingGuides.com.