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TEN TIPS TO CREATING A ROUTING GUIDE
Today, the routing guide is King and defines the rules of engagement between vendors and customers. Now, as logistics processes have come under more scrutiny, the routing guide must be more detailed, providing a solution for every shipping situation. Yet, it also must be easy to read, simple to use and flexible. Your vendors and customers will be more apt to comply with a guide if nothing is left to their imagination and the carrier’s, cost savings and route parameters are clearly spelled out. Here, Alan Miller, from RoutingGuides.com gives ten solid tips on creating a routing guide: 1. Organize your current and future shipments by origin and destination. Turn to your company’s vendor and customer files and identify origin and destination points in your entire distribution network. You can create something as simple as a state-to-state matrix or even as complex as a nine-digit zip-to-zip matrix. 2. Identify and chart the price / service capabilities and limitations of each transportation vendor, consistent with your desired level of service and cost.Know your carrier’s strengths and weaknesses. Some carriers are good at transporting perishables; others may provide the best service, but only to certain locations. Some carriers may provide great inbound service but less than optimal outbound service. Others may excel with overnight service; others may have strength in 3 – 5 day service. There are as many capability variables as there are carriers. Communicate the possibilities and where to access the best value for every transportation dollar you spend.
3. Identify shipment size (volume and weight), frequency, modal requirements, special needs and time in transit.Know the general make up of your shipments and the variables for time in transit. Identify weight groupings and service / modal requirements that apply to each group. Typical weight groups are 1 to 70 or 150lbs, 71 or 150lbs to 5000 lbs, 5001lbs to 12000 lbs and over 12000 lbs. Service / mode requirements can vary from overnight, two day, 3 day or 3- 5 day or Air, LTL, Truckload, Rail and Ocean. You may not want to provide a standard routing for overnight shipments weighing over 5000 lbs, nor would you provide a routing for ocean shipments weighing less than 70 lbs. Additionally, for shipments under 5000 lbs, you may want an opportunity to consolidate the shipment with others before it is shipped. Pay careful attention to your commodity mix and identify susceptibility to damage, contamination, heat and cold, etc. If some commodities cannot be shipped with others or require unique handling requirements due to their special nature, you need to provision for this. 4. Identify consolidation opportunities and weight breaks that support your price / performance needs.All too often, shipments are arranged as they come in from sales or order processing. A basic rule in transportation is that volume enables volume discounts from carriers. If your shipments can be consolidated, you will receive better service and rates. Take a look at your carrier rates. In many cases you will find that one carrier offers better pricing for shipments of varying weights, one carrier may offer lower pricing for smaller shipments while another carrier may offer lower pricing for larger shipments. 5. Create a cross functional matrix that considers all possible variables in Tips 1-4 but keep it simple.This is a basic “What If” matrix that leaves the decision-making responsibility with you, where it belongs. If your vendors are given the flexibility to choose carriers for you, they will almost always choose a carrier that they prefer, and not necessarily the one with which you negotiated the best rate or service. Most freight rate exceptions, most errors in documentation, and most causes for non-compliance can be associated with a lack of control. It is a difficult task to identify all possible combinations of circumstance and requirements, what’s more is that you want to keep your routing guide simple so that your vendors or other users can easily obtain the information that they are looking for. 6. Create a mechanism for exceptions handling that fit within your current business processes.While you strive to provide as much necessary information to your vendors as possible, there are circumstances for which you cannot account. So you need a mechanism to provide routing assignments and rules for those unique shipments that will occur. Create a contact form or shipment authorization form that can be easily executed by your vendors so that they can provide you with all of the information that you will need in order to obtain a carrier that will satisfy your requirements. 7. Create rulesYour rules will identify the general and specific rules of engagement for conducting business with your company and should identify anything that is necessary to maintain or improve the efficiency of your receiving, put away, inventory and accounts payable and receivable processes. Identify requirements for marking, labeling, tagging, bar coding, Bill of Lading preparation, Garment on Hanger Shipments, direct to floor merchandise, pallet specifications, contacts, purchase order guidelines, hazmat and back order processing. 8. Distribute your guide. Print only the number of copies you require so that each of the recipients can have access to the information appropriate for their need to know. Make sure each Routing Guide has a clearly stated security requirement clause and a clearly stated ramification for violations that compromise your company’s competitive privacy. Copies in the wrong hands are a potential security problem so you should know where every copy is at all times. When a vendor informs you that your Routing Guide has been misplaced, or even that parts are missing, be very concerned. The details in your Routing Guide can be highly competitive information that should be easily accessed by the ones who should have access, but not available to competitors or to those who do not have a need to know. All too often, a vendor misplaces a Routing Guide or has it open or available when a competitor to you is in the office. Security can be a very difficult concept to manage. 9. Create communications around your guide. Mail each guide with a signed delivery confirmation and a return receipt or fax acknowledgement form. Follow this up with a telephone call to review aspects of the Routing Guide where there might be confusion. Share comments about your Routing Guide with users, particularly where they pertain to exceptions that can improve your supply chain. Keep notes of these exceptions for addendums and future updates. A signed confirmation is not just a security function. You need to confirm that every vendor has the most recent edition of your Routing Guide available for reference when it is time to make a transportation delivery decision. The excuse that your Routing Guide was not available should not be tolerated. 10. Plan to repeat this process in four months or consider simplifying the process by taking it on-line.Things change and your Routing Guide is not a static process. You negotiate a lower rate. You find a better transportation alternative. A carrier goes on strike. A usual route or highway is closed or is prone to congestion or accidents. There are many reasons to continually revisit your Routing Guide. If you are working with old fashioned paper Routing Guides, you know that this is also an expensive on-going compilation and printing expense. If you have changed over to an electronic Routing Guide you can make changes as they occur so your Routing Guide is always current, always secure, and always ready for full compliance.
3. Identify shipment size (volume and weight), frequency, modal requirements, special needs and time in transit.Know the general make up of your shipments and the variables for time in transit. Identify weight groupings and service / modal requirements that apply to each group. Typical weight groups are 1 to 70 or 150lbs, 71 or 150lbs to 5000 lbs, 5001lbs to 12000 lbs and over 12000 lbs. Service / mode requirements can vary from overnight, two day, 3 day or 3- 5 day or Air, LTL, Truckload, Rail and Ocean. You may not want to provide a standard routing for overnight shipments weighing over 5000 lbs, nor would you provide a routing for ocean shipments weighing less than 70 lbs. Additionally, for shipments under 5000 lbs, you may want an opportunity to consolidate the shipment with others before it is shipped. Pay careful attention to your commodity mix and identify susceptibility to damage, contamination, heat and cold, etc. If some commodities cannot be shipped with others or require unique handling requirements due to their special nature, you need to provision for this. 4. Identify consolidation opportunities and weight breaks that support your price / performance needs.All too often, shipments are arranged as they come in from sales or order processing. A basic rule in transportation is that volume enables volume discounts from carriers. If your shipments can be consolidated, you will receive better service and rates. Take a look at your carrier rates. In many cases you will find that one carrier offers better pricing for shipments of varying weights, one carrier may offer lower pricing for smaller shipments while another carrier may offer lower pricing for larger shipments. 5. Create a cross functional matrix that considers all possible variables in Tips 1-4 but keep it simple.This is a basic “What If” matrix that leaves the decision-making responsibility with you, where it belongs. If your vendors are given the flexibility to choose carriers for you, they will almost always choose a carrier that they prefer, and not necessarily the one with which you negotiated the best rate or service. Most freight rate exceptions, most errors in documentation, and most causes for non-compliance can be associated with a lack of control. It is a difficult task to identify all possible combinations of circumstance and requirements, what’s more is that you want to keep your routing guide simple so that your vendors or other users can easily obtain the information that they are looking for. 6. Create a mechanism for exceptions handling that fit within your current business processes.While you strive to provide as much necessary information to your vendors as possible, there are circumstances for which you cannot account. So you need a mechanism to provide routing assignments and rules for those unique shipments that will occur. Create a contact form or shipment authorization form that can be easily executed by your vendors so that they can provide you with all of the information that you will need in order to obtain a carrier that will satisfy your requirements. 7. Create rulesYour rules will identify the general and specific rules of engagement for conducting business with your company and should identify anything that is necessary to maintain or improve the efficiency of your receiving, put away, inventory and accounts payable and receivable processes. Identify requirements for marking, labeling, tagging, bar coding, Bill of Lading preparation, Garment on Hanger Shipments, direct to floor merchandise, pallet specifications, contacts, purchase order guidelines, hazmat and back order processing. 8. Distribute your guide. Print only the number of copies you require so that each of the recipients can have access to the information appropriate for their need to know. Make sure each Routing Guide has a clearly stated security requirement clause and a clearly stated ramification for violations that compromise your company’s competitive privacy. Copies in the wrong hands are a potential security problem so you should know where every copy is at all times. When a vendor informs you that your Routing Guide has been misplaced, or even that parts are missing, be very concerned. The details in your Routing Guide can be highly competitive information that should be easily accessed by the ones who should have access, but not available to competitors or to those who do not have a need to know. All too often, a vendor misplaces a Routing Guide or has it open or available when a competitor to you is in the office. Security can be a very difficult concept to manage. 9. Create communications around your guide. Mail each guide with a signed delivery confirmation and a return receipt or fax acknowledgement form. Follow this up with a telephone call to review aspects of the Routing Guide where there might be confusion. Share comments about your Routing Guide with users, particularly where they pertain to exceptions that can improve your supply chain. Keep notes of these exceptions for addendums and future updates. A signed confirmation is not just a security function. You need to confirm that every vendor has the most recent edition of your Routing Guide available for reference when it is time to make a transportation delivery decision. The excuse that your Routing Guide was not available should not be tolerated. 10. Plan to repeat this process in four months or consider simplifying the process by taking it on-line.Things change and your Routing Guide is not a static process. You negotiate a lower rate. You find a better transportation alternative. A carrier goes on strike. A usual route or highway is closed or is prone to congestion or accidents. There are many reasons to continually revisit your Routing Guide. If you are working with old fashioned paper Routing Guides, you know that this is also an expensive on-going compilation and printing expense. If you have changed over to an electronic Routing Guide you can make changes as they occur so your Routing Guide is always current, always secure, and always ready for full compliance.
