The use of a transportation management system (TMS) for ongoing freight management optimization is not a new concept. Yet, companies around the globe are actively exploring and learning more about the value of freight analytics within a modern TMS to better control and manage their supply chains.
According to Steve Baker of Forbes, an annual analysis of global TMS markets’ average return on investment (ROI) is the leading factor in deciding to invest in such a system. The irony lies in the fact that freight analytics and ongoing optimization are what drive the ROI of a TMS. Shippers and logistics service providers need to understand how this ongoing optimization yields realistic savings.
Global Logistics challenges Mandate Freight Analytics
The challenges of global logistics management are everywhere. Political turmoil may lead to problems for supply chain management in the far corners of the globe.
Environmental influences, such as the weather, can bring the supply chain to a grinding halt. Meanwhile, public health crises may emerge seemingly out of nowhere. The challenges of global logistics management also include disagreements between cultures and barriers to communication.
It is a great big world out there, and the misinformed or ill-informed shipper will face the greatest challenges. This is where freight analytics prove their value.
Freight Analytics Enable Ongoing Optimization
Freight analytics allow shippers to continuously monitor and improve supply chain operations through insights into the supply chain visibility.
Consider this: visibility is great, but knowing what is currently happening does not always amount to knowing what should be happening and what needs to happen. Freight analytics make it possible. According to Steve Reis via Inbound Logistics:
Added Benefits of Analytics in Freight Management
- Increased compliance with the inbound freight routing guide, reducing costs and congestions for inbound shipments in your supply chain facilities. Improved compliance may reduce delays in dock scheduling and bottlenecks in the yard, lowering your risk of detention charges and even increasing eligibility for shipper-of-choice status.
- Reduce problems during audits by allowing supply chain leaders to intervene when a problem appears imminent. Since freight invoices have a relatively high rate of error, the use of analytics to recognize which carriers result in higher errors or even added expenses allows for better management through intervention to reduce risk and keep spending in control.
- Increased use of new shipping strategies, including cross-docking, drop shipping, and multimodal shipping, to improve freight spend and reduce hassle. The use of new strategies sounds great, but analytics provide detail into whether such improvements are truly impacting the bottom line.
- Ongoing performance measurement for company-specific data and activities, which is applicable to both carriers and your customers. Ongoing performance measurement lends itself to actionable insights to help your team, partners, and customers get more value from the supply chain by being more proactive and less reactive.
- Set the stage for advanced machine learning by leveraging analytics. Understanding impacts to your transportation strategies enable defining processes and actions the system needs to take to resolve. The resolutions can then be used to enable the system to make intelligent decisions about how to automatically adjust course in a turbulent environment.