Archive for September, 2013

A Pragmatic Guide To Managing Transportation Costs …the keys to success may not be what you think

Monday, September 16th, 2013

By Mike Challman,  Vice President, North American Operations

Let’s try a quick word association.  What comes to mind when you hear “transportation costs”? For many of you, the immediate thought will be “carrier rates”.  It’s a valid response, but; unfortunately, it is also one that can reveal a limited point of view about the best way to manage those costs.

For many shippers, the go-to strategy to reduce or control transportation costs is to continually pursue carrier rate reductions while ignoring other, equally important, aspects of the equation.  Outlined below are a few guideposts to provide some food for thought about how you can positively influence carrier rates, and, in turn, more effectively manage your transportation costs in ways that go beyond just trying to squeeze a few more cents out of your carriers.

#1: Carriers Are Entitled To A Fair Rate of Return On The Service They Provide – The success of your transportation network relies on good carriers.  While you do not want to over pay to ensure access to high-quality capacity, you must remain competitive in the market. Do you know where your rates stand relative to others with similar shipments?

#2:  You Can Usually Find a Cheaper Carrier… But You Risk Paying For It In Other Ways – A lower line haul rate doesn’t always mean less total cost.  You might pay more in accessorial costs or, even worse, you may be faced with degraded service performance, increased claims activity and more customer complaints. Do you have a carrier management program in place that addresses all areas of potential carrier cost?

#3:  Sometimes The Main Reason Your Carrier Rates Are Going Up Is… You – A carrier will consider multiple factors when assessing whether or not you are a ‘good’ shipper.  That includes ease of operation at pickup and delivery points, dependable and accurate information as well as the timeliness and accuracy of carrier payment. When is the last time you evaluated your supply chain to find areas for improvement?

#4:  Not All Of Your Transportation Costs Are Controllable By The Carrier – In fact, most issues in your network are related to forces other than carriers.  A carrier influences transportation costs only when in possession of your shipment.  Before and after that timeframe, you must look at other factors. Do you know the impact on overall cost resulting from activities at your ship locations?  From decisions made by Sales or Customer Service?  From the expectations of your customers?

#5:  A Well-Managed Transportation Network Benefits Everyone – When your entire network operates efficiently, all parties enjoy the benefits – particularly you and your customers.  And from your carriers’ perspective, you may find a greater openness to rate negotiations if you have a reputation for keeping their trucks moving.  Are you looking at the whole picture when you consider ways to improve your transportation costs?

 Bottom Line:  Address the source of the issue, not just the most apparent symptom.

While carrier rates are often at the top of our mind when considering transportation cost issues, higher rates can be a response to other issues and not the root cause.  Shippers need comprehensive and effective carrier program management (CPM) to measure, identify, discuss and solve all of the issues that can impact carrier rates.

A successful CPM will develop strong relationships with the best carriers, effectively address carrier performance issues quickly when they do arise, and ensure a productive and continuing dialogue to identify all of the areas that are impacting a carrier’s ability to provide the best possible service at a competitive rate.  In the end, your best word association response to “transportation costs” can be “well managed”.

ChemLogix offers a variety of managed services in conducting freight benchmarks and developing an effective CPM.  To find out more, refer to http://www.clxlogistics.com/services/managed-services/or contact Mike Challman at mchallman@chemlogix.com.

 

 

SaaS TMS Offers Operational and Cost Advantages over Traditional Hosted Solutions

Wednesday, September 4th, 2013

by Bill Wolfe, Director, Global Technology

According to a recent report by ARC Advisory Group, the TMS (Transportation Management System) market has “bounced back” after the global recession, growing faster than the rate of inflation in 2010, with significant growth forecasted through 2015.

While hosted TMS solutions have been deployed in the market for over 20 years, SaaS (Software as a Service) or cloud-based TMS solutions are rapidly outpacing hosted solutions, with a 6x annual growth over premise systems.  That’s because a SaaS TMS offers significant application and cost advantages over traditional hosted solutions:

Network Connecting:  Most SaaS TMS provide a pre-established and extensive network of carriers, suppliers and trading partners.  As shippers look for new capacity in a carrier-limited market, greater access to carrier resources provides a competitive advantage in contracting additional capacity or optimizing relationships with existing partners.  With a SaaS TMS, only one connection is necessary to interface with multiple logistic partners, carriers and vendors.

Continuous Improvements:  SaaS TMS enhancements are seamless and executed on a continuous basis.  As new functionality becomes available, upgrades are automatically accessible to all users at once with very little, if any, effort required by the user. With a traditional TMS, upgrades are normally at the discretion of the user; therefore, their hosted TMS can become outdated and support may no longer be available if upgrades do not occur over a certain period of time.  Also, when upgrades are executed, a much larger effort is required from the user compared to a seamless SaaS TMS upgrade.

Lower Cost:  As no hardware needs to be purchased, implemented, or maintained with a SaaS solution, shippers spend very little in internal IT costs when utilizing a SaaS TMS.  Additionally, as many logistics partners connect directly to the SaaS TMS, users do not need to maintain EDI connections as they are already established and supported through the cloud-based system.

Fast Deployment:  With little IT footprint and no hardware requirements, SaaS TMS implementations can be completed within a few weeks.  Additionally, as the SaaS TMS can be configured and utilized through a web-browser, all of the implementation steps (such as customization, administration, testing, training, etc.) can be fully controlled and implemented by the project team without the need for IT development work.

Customization:  Many SaaS TMS solutions now offer similar levels of customization as traditional TMS.  Users can turn offer certain functions and customize applications to meet their requirements.

Time to Value:  Rapid deployment generates quicker ROI in about 12 to 24 weeks.  Cost savings from optimization, automation and control, and reporting is about 10% of the shipper’s total logistic costs.

For a no-obligation demonstration of CLX’s SaaS TMS from IBM, call (215) 461-3800.