Supply chain efficiency is the lifeblood of any business. All businesses have processes designated to help them run smoothly, but it's important to know how to utilize these processes in the most effective ways. For most companies to be as efficient as possible, transportation sourcing is an important component to their business plan. However, finding the best way to get goods or materials to their destination can be challenging. Choosing a transportation provider is a complex task, which makes building a solid freight procurement plan integral in minimizing potential losses.
Procurement is traditionally the process of sourcing goods and services to help run a business, and it's usually done through a type of bidding process. If we consider a niche area of the industry, freight procurement (also transportation procurement) is then the process of sourcing adequate transportation capacity to haul goods or materials from one place to their destination. Transportation is acquired and then managed, in the process. The process has to take into account factors such as locations, timeframes, rates and transportation availability, which can become complex.
For companies to become as efficient as possible, considering their transportation sourcing is an important component to their plan. Companies need to assess carriers, analyze costs and negotiate rates, among many other tasks during the procurement process, which can be time consuming. Many companies have turned to digital software to help simplify this process, allowing greater transparency in shipping schedules, transport routes and rate negotiations. In addition to digitization, there are several key practices which can contribute to an efficient and cost effective procurement process, thereby increasing productivity.
Lack of detail leaves more room for error, which is a risk for both the transportation provider and for the goods. In order to get the most out of your transport provider, it is important to be as direct and detailed as possible about your load and needs. Important details such as number of goods, their volume, any equipment needed, as well as the loading hours, can all help a transportation provider plan their services to comply with your needs and maintain quality.
There is no one-size-fits-all in transport. It is essential not to choose transportation based only on what is cheapest, rather take into account the lead times and other variables. An inexpensive transport option may look good, but if it takes three times longer than another option, than you may be losing money in the longer delivery window. You will need to know your inventory and storage needs and costs, to understand whether you are going to be losing out on profit because of any delays. Carriers need to be able to provide value to your company, while mitigating any potential risks. Transit time, reliability and quality of service (handling of your goods) are all factors to consider.
Timing is everything. If you want to adhere closely to a shipping timeline without potential delays or added costs, then it is imperative to be careful with the timeframes you are aiming for. Certain times in the month, for instance, will see less LTL capacity, which raises the prices. Also take into account weather conditions and consider the days you can ship, as opposed to when you should be shipping. It is always beneficial to look at the actual transit time and not the published time, as there can be delays due to weather for instance, creating a discrepancy between the two. Another effective, but overlooked, strategy is to consider carrier capacity in your decision making, as some carriers offer better rates for freight which is along a route where a trucker is coming back empty.
The most effective shipment strategy is to really know what you are shipping. It is important to become familiar with the products needs; such as safe packaging, stored temperature, and handling, in order to know what to look for in your transportation mode or carrier. If you will be shipping LTL, then you will need to become familiar with freight classes and the NMFC classification. Once you are educated on the product itself, it is essential to learn about the capabilities of the carrier, and whether they can safely handle your freight needs.
Planning ahead is a cost effective method to finding the right transportation providers. Last minute contracts are usually more expensive, because of market fluctuations and shippers often becoming more desperate to move the freight. It is also not a wise option due to unexpected factors such as emergencies or weather related delays, which can become costly and lead to delays which affect your business.
When planning for shipments, it is key to look ahead into potential issues which may arise, and develop a contingency plan, such as potentially shipping portions of a shipment at a time. Know which resources you may need if something goes wrong and who to call, so that you are not left scrambling. While it does happen, ideally you will also want to avoid giving a new carrier a last minute emergency shipment, as it is not a valid reference point of what working with that carrier is like on a regular basis for your company.
Freight is a major part of any business, but sometimes big decisions can be made where there isn't enough information. The right freight plan is essential to minimizing cost and maximizing the efficiency of your supply chain. When it comes to sourcing the adequate transportation, it is essential to consider cost-effectiveness, efficiency and business needs. It’s not just about delivering the goods. It’s about making sure they reach their destination safely and on time with minimal damage and at a reasonable cost.