Benefits of Visibility to Reduce Costs in Freight

Reduce Costs Of Freight

To reduce costs in freight management and improve collaboration, shippers need to understand the impact visibility has on supply chain management.

Visibility issues remain critical concerns for all parties in the modern supply chain. Poor visibility makes decision-making difficult at best. And, to achieve truly effective supply chain collaboration, end-to-end visibility is a necessity. 

After all, how can shippers and carriers work together if they don’t have a holistic view of what’s happening within the organization? 

poor Visibility and Higher Logistics Costs

Poor freight visibility is associated with significantly higher logistics costs. 

While exact statistics can vary, poor visibility results in delayed decision-making. With poor visibility, when issues arise it doesn’t become evident or correctable until it causes a major disruption. 

For example, poor visibility into last-mile logistics may only become known when the customer reports the product was never delivered. Until customers start asking, “where’s my stuff,” no one really knows without real-time visibility. 

Additionally, shippers will see an increase in freight costs in the form of re-sending a shipment, taking away from existing activities to file freight claims with carriers. This leads to customer service issues as shippers work to regain trust.

Visibility is a Tool to Reduce Costs in Freight

Visibility helps shippers reduce costs in freight spend. 

More visibility into all operations also allows shippers and logistics service providers to intervene proactively when problems arise. Visibility, as an extension of data collection and analysis, helps shippers and logistics service providers understand what has happened, what may happen, and what needs to happen to achieve the desired result. 

Further, organizations around the globe are starting to embrace newer, lean fulfillment strategies, and visibility lies at the cornerstone of these strategies.

For instance, visibility is a prerequisite of continuous replenishment, also known as just-in-time fulfillment, and to some degree, all lean fulfillment strategies. Essentially, any process that requires a continuous stream of inbound logistics to meet base demand is a continuous replenishment program. Why is that important, though?

Continuous replenishment has the key benefit of lower logistics costs. As reported by Industry Week,

“APQC’s data shows that organizations with continuous replenishment programs for customers to spend less on logistics (Figure 1). At the median, organizations that have implemented these programs spend $19.95 less per $1,000 in revenue to manage logistics and warehousing functions than organizations without these programs. For an organization with $5 billion in revenue annually, this would mean a $99.8 million savings in logistics spending when using a continuous replenishment program.”

Additional Ways Visibility Helps Reduce Costs in Freight Management

Visibility benefits go well beyond freight costs. All businesses are struggling with the balance between efficiency and customer satisfaction. But why must it be an either/or situation? 

Today’s modern supply chains, with the many technology options available, must be able to operate efficiently, while also meeting or exceeding customer expectations. The quest to reduce costs in freight is a primary reason a shipper, broker, or freight forwarder will invest in and implement a TMS. But it is also important to consider the value of an enterprise TMS in making an organization more strategic, and therefore enabling a deeper focus on customer service. As any good business leader can attest, the cost to acquire a new customer is high. Customer retention and the ability to increase the lifetime value of revenue and profit for each customer is yet another way to reduce an organization’s total costs. This goes beyond just the cost reductions that a TMS provides through greater freight visibility.

As customers demand more from shippers and others in the logistics industry, companies are tasked with providing a better customer experience, while at the same time not increasing costs. This means delivering the right product in the right quantity, with no damage, while also getting it there on time for a low cost or free. Providing this level of nearly perfect service is daunting without a high level of freight visibility. If a company loses sight of freight during any stage of the shipment process, there’s a greater risk that something will go wrong, translating to an unhappy or even lost a customer.

To recap, additional key benefits of visibility to reduce costs in freight management include:

  • Fewer freight claims issues.
  • Better compliance and prevention of compliance violations.
  • Improved customer service levels.
  • Better carrier rates resulting from more information about volume and demand.
  • Reduce the risk of delays, resulting in demurrage or added drayage costs.

Deploy a TMS to Improve Visibility Now

Visibility hinges on real-time data. Every company wants the ability to foresee problems before they arise in order to develop a strategic plan to best mitigate their losses. Real-time data makes it possible. Stop wasting time and improve visibility by making the decision to implement a comprehensive, enterprise TMS in your organization now.

Discover how Supply Chain Visibility Helps Reduce Costs in Freight Management.

John Martin

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