Poor visibility, lack of management, lack of planning and an ineffective transport management system can all have dire consequences for a business including missing deliveries, incurring unnecessary costs and ultimately losing valuable business. So how do you reduce the risk of these problems occurring and what can your business do to avoid these?
Reducing Risks in Transport Management
1. Be realistic about the service level you need
Expectations are critical here. If your customers aren’t expecting to receive shipments within 3 days then there is no point in over paying in order to get shipments to them in 1 day. By making sure that you understand expected time frames you will be able to reduce the risk of unnecessary spending.
2. Make use of a well-known transport management software system
Transport Management Software Systems should make your transportation process easier and not more complicated. A good transport management system should be customisable and suit your particular business needs. It should also be designed to integrate seamlessly with external ERP’s and ensure adherence to regulatory compliance. Read more about the advantages of an effective transport management system here. A good and effective transport management system should ultimately save you time, money and reduce your risk substantially.
3. Map out shipping criteria with your carriers
A business is able to significantly reduce their risk if they are able to sit down with their carriers and match their requirements with the carrier’s services and fees. It has been proven that companies that fail to work closely with their carriers can spend up to 25% more on their transportation services than those that do. By mapping out criteria you can reduce the risk of incurring additional costs.
4. Put measurable KPI’s in place for carriers
In order to reduce the risk of carriers not performing to the level that you expect, put together a set of KPI’s and track their performance with a scorecard. Meet with each carrier and set up a manageable number of high-value KPIs, such as transportation cost per shipment or order, invoice accuracy, data availability, inbound and outbound cost to serve and customer satisfaction measures. These type of metrics help to manage the relationship with the carrier and allows you more control over the process.
5. Strategic shipment consolidation
In order to reduce risk of incurring high transportation costs, businesses can consolidate shipments especially if they have less-than-truck-loads (LTL) shipments. Many third party (3PL) logistics companies are able to consolidate small shipments from more than one company that need to go to the same destination, thereby reducing cost and risk.
As can be seen from the above, there are definitely ways that a business can reduce their risk when it comes to transport management. It is important to partner with a business that understands the risks involved in logistics and has experience in addressing and reducing these.
Dovetail Business Solutions specialises in providing leading transport management software solutions to the logistics industry. These are configured to increase logistics management efficiencies, affordability and to optimise the transport management processes. Contact Dovetail Business Solutions today for more on how improve your transport management process.