Supply Chain Optimization: How to Improve Freight Operations to Alleviate Common Pain Points

Supply Chain Optimization

As companies combat supply chain disruption—regardless of whether it’s the latest move by a competitor or a public health event—the use of supply chain optimization remains paramount to success. 

The solution to improved network resiliency, supply and demand planning, accounting prowess, and visibility into logistics stem from a common factor. These advantages in the supply chain rely on advanced systems, including a transportation management system (TMS), that work to improve operational excellence and avoid unnecessary risks. 

In this blog we will address areas where shippers and logistics service professionals need to understand including:

  • The problem in maintaining substandard optimization efforts.
  • How robust capabilities and resources add value.
  • Best practices to achieve top-notch results in spite of obstacles.

The Problem With Maintaining the Supply Chain Status Quo

Today’s supply chains have a simple choice to make. Maintain the status quo with outdated, antiquated methods of optimization or evolve using data and automation. 

The problem with maintaining the status quo lies in the rapid evolution of supply chains of all sizes in recent years. The rise of software-as-a-service (SaaS) platforms and cloud computing capabilities changed the landscape, and companies around the globe are now taking advantage of data and automation at a fraction of the cost of what they had typically been paying for traditional and even in-house optimization resources.

Failure to collect, capture, and analyze data with the help of automation, will amount to over-ordering or poor carrier selection. The total landed costs of goods will rapidly spiral out of control, and shippers and logistics service providers will be left holding a higher freight bill and lower profit reports. In fact, failure to optimize operations will leave up to 40% of freight spend on the table. That represents a huge value that could be used to keep product price points under control, work with more carriers, and build a better, more productive workforce. 

Ultimately, supply chain optimization can transform the dismal outlook into an opportunity to achieve business growth.

Supply Chain Optimization Resources Improve Freight Operations

Supply chain optimization must look at the whole picture, including what’s happening in domestic and foreign markets, the state of spot rate fluctuations, how contracted service providers are changing operations to meet regulatory upheaval and more. Furthermore, optimization must begin with a proven resource, such as a dedicated, SaaS-based TMS. 

The strategic value of derived from supply chain optimization fuels its ongoing pursuit, said Shreyas Bhat via Inbound Logistics.

“Brand strategy is the guiding precept for supply chain management. To support the brand strategy, supply chains are designed to align their assets to help meet business objectives. Network design pre-determines about 80 percent of transportation costs, according to studies.
This is where optimization solutions such as distribution center (DC) network design or strategic sourcing provide value. DC network optimization helps decide if you have the right number of DCs, identifies the best location, and determines capacity.”

Tips to Overcome Obstacles Through Supply Chain Optimization

Countless opportunities to optimize supply chains exist. According to Steven Bowen of the Forbes Council, these include:

  1. Redefining the supply chain to broaden the scope of supply chain excellence and optimizing the end-to-end supply chain, reviewing procurement through reverse logistics, and even looking at the customer experience and its impact on efficiency or productivity.
  2. Leveraging a cross-functional team that will visualize and make informed decisions with how to respond to supply chain disruptions and accommodate sudden peaks or lulls in operations; such activities must rely on data and reporting capabilities that transcend the barriers of working from home or working remote third-party locations around the globe.
  3. Tracking the right metrics to increase visibility, hold supply chain partners accountable, and identify the effects, including both short-term and long-term results, of such performance and visibility initiatives.
  4. Working with the C-Suite to understand supply chain needs and operate within budget restraints, not to mention making technology improvements where necessary and build an appropriate, data-driven business case for such investments.
  5. Deploying a SaaS-based TMS that connects suppliers, vendors, customers, and your company in one platform; collaboration and automation within the platform must enable turn-key operations to track and improve route selection, rating, accounting, and more.
  6. Let robotics process automation handle the day-to-day activities, reducing reliance on manual labor and resources and improving efficiency along the way.

Overcome Obstacles With a TMS That Relies on Supply Chain Optimization for Decision Making

The difference between the right TMS and the almost-right TMS is the difference between delivering on time or delivering when the next truck has already pulled up to the dock and taken the last available spot for days. 

Failure to move freight efficiently and at the best possible margin will erode profitability, lead to lost trust in your company, and open your business to the risks of everything from any health pandemic to government compliance violation fines. 

Instead of risking your empire on the hope that your current optimization efforts work, guarantee their success by leveraging the power of a proven, reliable TMS that looks for, finds, remedies, and prevents pain points from disrupting your operation.

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John Martin

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