10 Steps to Better Freight Optimization

Freight optimization benefits from technology.

How often do you think about freight optimization

Everyone uses the term loosely, but it is much more than merely finding the fastest route to send a shipment. It includes the various modes needed, the cost (including the impact on the environment), traceability of shipments, delivery confirmation and automated notifications, and much more. 

Today’s shippers have an opportunity to increase customer service through improved and ongoing freight optimization. Unfortunately, shippers may not know where to start or how to get the most out of their transportation management systems and processes.

Instead of trying to figure it out alone, here are 10 suggested steps that shippers should follow to optimize freight.

1. Review All Available Modes and Rates per Shipment

A thorough review of all available routes, modes, and rates for all shipments allows for better freight optimization and management. Remember, freight optimization focuses on fulfilling a given task or objective in the fastest and most efficient way possible. 

Since customer experience and service impacts transportation management and vice versa, shippers must ensure the chosen selections will address and even exceed all the basic needs of customers.

2. Diversify Your Carrier Network

Speaking of increasing access to various freight rates, modern shippers should also diversify the carrier network. 

According to the American Trucking Association, 97.4% of fleets consist of fewer than 20 trucks. With such a large volume of smaller sized fleets, failure to diversify beyond the big three carriers effectively alienates 97% of all fleets.

3. Use Multiple Routing Options to Assess Potential Freight Optimization Risks/Opportunities
Multiple routing option analysis ensures the chosen route is the most appropriate and meets the demands of all involved parties.
4. Take Advantage of TMS Exception Automation
TMS exception automation remains a new area of supply chain management. Exception automation uses artificial intelligence and big data to make changes to shipment schedules based on demand, external influences, and other problems (exceptions) that occur within the TMS.
5. Focus on the User Experience; Easy-To-Use Systems Increase Adoption Rates

Improved user experiences and smooth rollout of a TMS encourage faster, widespread adoption of new systems and processes as reported by Logistics Management. More importantly, cloud-based platforms have lower costs to implement, allowing financial resources to be allocated for more strategic purposes.

6. Implement Systems With Proven, Six Sigma tactics
Six sigma tactics involve the review of all risks and opportunities before making a decision. These factors will enhance the value added through new systems and changes in workflows, including freight optimization. Also, six sigma eliminates waste and process errors, allowing shippers to do more with less effectively, explains Supply Chain Brain.
7. Modify Only What’s Necessary; Leave Most of the System Alone

Unnecessary modifications to supply chain platforms add to the transportation total cost of ownership and may require continuing upgrades and unnecessary charges in perpetuity. 

While a customized solution may seem ideal, today’s off-the-shelf platforms have a broad scope of functionality that will likely meet or exceed your minimum requirements. For shippers operating with legacy platforms, simply leveraging a modern solution may render the need for a modification meaningless in the first place.

8. Consolidate Shipments by Mode; Remember Role of Deconsolidation

Consolidation and deconsolidation allow shippers to take advantage of lower rates for specific modes. 

For example, small package consolidation may give rise to LTL shipments and eventual full truckload shipments. However, the increased number of touchpoints in consolidation/deconsolidation programs means all data and activities need close monitoring.

9. Give Customers Incentives to Wait on Delivery

Today’s consumers are informed, and when given a choice, they are likely to choose the fastest shipping option. And, many consumers are willing to pay a premium for faster service and delivery. 

However, such deliveries may come at a cost to the environment. Shippers should play on the collective consciousness of sustainable practices, showing why a faster shipment may cause environmental damage. To achieve this, integration between customer POS systems and the TMS is essential as well.

10. Measure Freight Optimization Results & Continuously Build Best Practices to Drive Success
Keep in mind that all processes rely on careful monitoring and adjustments to ensure long-term success as conditions change. Continuous improvement depends on ongoing data management and measurement.

Put the Right Systems and Processes in Place to Improve Freight Optimization

The right systems and processes augment freight optimization practices, putting money and resources back in the hands of shippers. Instead of merely eating the high costs of transportation management, transportation managers today have more tools available than ever to be proactive.

Download our eBook to discover how a leading TMS with multimodal freight optimization capabilities can improve your logistics processes.

See how multimodal freight optimization enables profitability.


Leave a Reply

Your email address will not be published. Required fields are marked *