A PUBLICATION OF CERASIS

HOW TO SHIFT FROM TACTICAL TO STRATEGIC LOGISTICS & TRANSPORTATION MANAGEMENT TO CREATE A COMPETITIVE ADVANTAGE

TABLE OF CONTENTS

1

2

3

4

5

Introduction

10 Ways Effective Transportation Management

Drives Competitive Advantage

8 Steps to Controlling Inventory Flow &

Driving Warehouse Efficiency

6 Strategic and Proactive Tips to Stay Ahead of

Distressed Shipments

5 Areas of Technology Application to Aid in

Logistics Visibility and Communication

6 Benefits of Applying Useable Data in

Logistics For Continuous Improvement

Strategic Logistics Management: The

Importance of Flexibility6

TABLE OF CONTENTS

8

9

10

11

Why A Successful Transportation Management

Program Is Empowered By Data

How Effective Logistics & Transportation

Management Leads to Scalability

5 Benefits from Logistics Sustainability &

Efficiency

5 Engagement Strategies in Managing a

Relationship With a 3PL

5 Change Management Tips to Create a

Strategic Transportation Management Mindset

Conclusion

7

INTRODUCTION

Strategic Transportation & Logistics Management

Transportation management is no longer a tactical approach to simply moving freight

and doing it at the lowest possible cost. There are several factors that exist today that

are forcing shippers to use even more resources, which distract from their core

competencies, in order to have a strategic and much more nuanced, complex

transportation management practice. Those savvy shippers who either find those

resources internally or are doing what a lot of shippers are now doing, outsourcing to

a transportation management service provider, are using a more strategic and effective

transportation management approach as a competitive advantage tool, in the ever-

challenging economic and commercial landscape.

As we head towards what many experts are citing as a 2017 carrier capacity crisis and

growing demands from consumers to keep them happy call for shorter delivery cycles,

the traditional strategy of procurement cost saving and shipment consolidation

opportunities have to be supplemented through innovative solutions, to deliver the

best bang for the buck.

This is especially relevant for third-party logistics and transportation management

service providers, whose service fee is based on reducing cost and streamlining the

shipper’s supply chain. For those looking to get more effective transportation

management.

Join us in this comprehensive e-book as we look at the following 10 ways effective

transportation & logistics management drives a competitive advantage for shippers.

INTRODUCTION

Chapter One

10 WAYS EFFECTIVE TRANSPORTATION MANAGEMENT DRIVES COMPETITIVE ADVANTAGE

10 Ways Effective Transportation Management

Drives Competitive Advantage

We will explore in this e-book 10 areas of focus that shippers can employ in their own

transportation and logistics management practices themselves or with the aid of a

third party logistics provider in order to create a strategic approach to shipping and

other logistics functions. Below, you will see these 10 core areas with a brief

introduction to each. In subsequent chapters we will then expand upon each at length

to offer practical tips that any shipper can begin to use in their own business.

A strategic or proactive approach to transportation and logistics management allows a

shipper to create a competitive advantage as the paradigm and practical shift to

strategic away from tactical lends more time and resources for a shipper to focus on

their own core practice. A manufacturer or distributor, is not in the business of

transportation management, so any way to get more value out of these two business

functions provides a competitive advantage over competitors who are not as efficient

and strategic with transportation and logistics management.

1. Controlling Inventory Flow & Driving Warehouse Efficiency

Effective transportation & logistics management strategy takes into account the

availability of materials and order fulfillment requirements, ensuring that those

resources are optimally utilized and warehouse capacity. Attempting to "normalize”

flow through a distribution center or inbound to manufacturing is a critical aspect to

controlling overall logistics and transportation costs. Additionally, some level of

predictability helps in the carrier sourcing aspect of the business too.

2. Gaining "Shipper of Choice" Status

With mindfulness towards a strategy in effective transportation management that

drive capacity commitments with a myriad of select carrier partners per lane, easy pay

terms and rewarding performance, shippers are making it easier for carriers to do

business with them. Gaining "Shipper of Choice" status empowers the shipper to

gain an awareness and understanding which in turn aids your partner carriers in tight

capacity marketing. Working with carriers and all the freight you manage to create

continuous movement strategies is a win-win approach.

3. Using Technology to Provide Visibility to Shipments and Communicating

en Route Disruptions

The ability to proactively identify service disruptions is critical in today's fast-moving

communication world. One of the most overlooked success factors to shipment

tracking is simply defining what the expectation is between your own company, the

receiver of the goods, a 3PL, and your carrier partners. Too often the 3PL and

shipper are not aligned on the expectation of shipment tracking. Does the 3PL have

technology for effective transportation management allowing for the ease of

communication? Additionally having a robust process, and authority to act when

shipments do not go as planned, is important to effectively manage distressed

shipments.

4. And Understanding & Visibility into the Data in Transportation for

Continuous Improvement

Continuous improvement in effective transportation management is now often

realized by strategic shippers thanks to the increased use of technology and integrated

systems providing the ability to data mine transportation reports for substantive

business intelligence. This large movement towards more use of the data to glean

insights created by processes within technology is known as "Big Data." The ability to

analyze the freight spend down to a single customer, at an order or even at a product

level, can be a key input to developing competitive product pricing and identifying

opportunities for change.

5. Improved Flexibility Creates Higher Customer Satisfaction & Ability to

Service Different Size Orders

Highly sophisticated order optimization capabilities is a direct result of effective

transportation management. This increased flexibility from not having to get down in

the weeds of process allows a shipper to not compromise delivery requirements and

freight spend budget. Technology and historical analysis of transportation data allows

load planners to determine the optimal modes of transportation as well as the

preferred carriers who are consistently performing.

6. Creating an Effective Transportation Management Program Run by Metrics

Speaking of metrics.....Utilizing the right metrics to monitor the health of your

transportation footprint and network are critical. Transportation management systems

provide a wealth of information, but it can be overwhelming finding the right metrics

to manage your business. Identification of key process indicators will help focus your

search for the right data. It’s also important to have flexibility in generating metrics.

As your business changes, so will your metrics requirements. Having the ability to

transform data into usable knowledge is the goal.

7. Allows for Scalable Business Operations Across all Departments

As your organization expands through growth and acquisitions will your

transportation management strategy and technology meet the increased demand and

complexity? Having a scalable solution is critical to meeting today’s rapidly changing

business environment. Integrating all your separate supply chain systems together will

allow you to manage your business through a single lens. Additionally, when you have

more access to your transportation spend due to housing all of your supply chain data

within technology, the leaders of the business can better understand how

transportation affects other parts of the business such as customer service, marketing,

and sales.

8. Sustainability to Lower Carbon Footprint and Increase Customer Affinity to

Your Brand

A smaller carbon footprint can be had in nearly any operation via consistently and

continuously seeking shipment planning options, consolidation opportunities and

mode shift capabilities. As we said in our post, "Attracting Millennials to

Manufacturing: Understanding Millennial Experience in Order to Gain Talent &

Customers," millennials care a lot about the future of the environment. Those

shippers who build an effective transportation management strategy to include

sustainability initiatives, will beat out the competition who does not.

9. Properly Engaging & Managing a Relationship with an Effective

Transportation Management 3PL

When selecting a 3PL to aid you in a robust and effective transportation management

strategy, defining the rules of engagement is critical to success. Do you even first

understand your own needs? We've built a deep checklist to understand first before

you go about engaging with a 3PL. When you do engage and hire a 3PL for effective

transportation management, it is vital that you look at this relationship as a

partnership and not a commodity. Empowering people to make decisions and holding

them accountable for the outcome is a foundational aspect for any program.

Understanding the client’s business environment and aligning the right resources to

the program is a must and an onus on the 3PL you hire. There may be occasions

when the relationship is challenged. Having a strong relationship and project

sponsorship on both sides will ensure a successful outcome.

10. Pivoting to a Strategic Look at Transportation Management Requires

Change Management

Does your company embrace or challenge change? Having the mindset to accept

changes is critical for any 3PL to deliver value. Engaging with a 3PL or TMS software

and asking them to do what we do today and expecting a different outcome will lead

to disappointment. Being able to accept change is critical for the success of any

program.

If you are a shipper who seems to always feel in the weeds of tactics, most likely you

are not eliminating all the wastes, such as unnecessary costs or time used to manage

transportation, that you could be by looking at an effective transportation

management strategy driven even further by the use of a 3PL.

Chapter Two

8 STEPS TO CONTROLLING INVENTORY FLOW & DRIVING WAREHOUSE EFFICIENCY

8 Steps To Controlling Inventory Flow & Driving

Warehouse Efficiency

“Victorious warriors win first and then go to war, while defeated warriors go to war

first and then seek to win.”

― Sun Tzu

“The essence of strategy is choosing what not to do. ”

― Michael E. Porter

"However beautiful the strategy, you should occasionally look at the results."

― Winston Churchill

"The best CEOs I know are teachers, and at the core of what they teach is strategy."

― Michael Porter

"The aim of marketing is to know and understand the customer so well the product

or service fits him and sells itself."

― Peter Drucker

"The purpose of a business is to create a customer."

― Peter Drucker

"Sound strategy starts with having the right goal."

― Michael Porter

Staying Strategic in the Warehouse with Better Inventory Flow

Throughout the entire order fulfillment process, companies have a duty to ensure

optimum warehouse efficiency by appropriately controlling inventory flow. Warehouse

management rests at the heart of an effective transportation management strategy,

and an inefficient, error-laden system results in poor shipping procedures, poor

customer satisfaction, and deviations from best practices.

Companies must also consider the potential impact of returns and warehouse

capacity. An overstocked warehouse leads to misplaced product in unusual slots and

lost costs. Similarly, an understocked warehouse results in delayed shipments, irate

customers, and poor company performance.

Every time an item moves in the warehouse, the opportunity for errors exist.

Unfortunately, this includes all possible processes, data collection points, and inbound

to manufacturing areas. Fortunately, a dedicated transportation management system

(TMS) in combination with a warehouse management system (WMS) can reduce, if

not eliminate, these errors. Warehouses should also consider implementing these best

practices to ensure effective warehouse management and maintain control and flow

of inventory.

Automated Data Collection

Some companies believe in the power of a pen and paper in tracking inventory

movements. However, the sheer volume of today’s processes in warehouse

management have made hand-written tracking procedures obsolescent. The same

problem exists with manual entry of information into computers and electronic

shipping systems. Although such methods still exist, they can easily misread,

misunderstood, or entered incorrectly. As a result, subsequent shipping processes for

a specific order become disorganized and inaccurate.

Modern warehouse management demands bar codes or radio frequency identification

(RFID) to automatically track and collect data about an item. This eliminates the

potential for human errors in transcribing information manually.

When automated data collection emerged, the cost of implementing such technology

exceeded the possible losses from human errors. However, automated data collection has

become more affordable and cost-effective in the global economy. Automation carries a

significant return on investment when a warehouse makes the transition. Initial change

will be hard for the warehouse, but it will cut costs and improve overall performance of

the facility.

Transaction-Based Movements Inventory Flow

Every movement throughout a warehouse represents a chance to lose track of inventory,

cause an error in the order, or result in additional picking errors. Every movement from

arrival to slot-placement to picking to wrapping should generate a transaction.

Transactions are commonly misunderstood to reflect the sale of merchandise. However,

transactions within a warehouse allow for the tracking of a product’s movements and

status in the order fulfillment process.

Dock Arrival Times

All merchandise should arrive on the dock at the same time when the truck arrives. This

reduces wasted space by sitting product. Furthermore, differing types of shipments, such

as full pallets, cases, and individual item shipments, should be sent to the dock

simultaneously.

Picking Procedures

Managing a warehouse to better inventory flow requires predictions and managing orders

that have yet to arrive. Pickers, which may be human or robotic, should plan for the next

wave of picking. If an upcoming wave will result in picking shortages in one portion of

the warehouse, pickers should be diverted from lower-priority picking duties to the surge-

area. This will help maintain pickup times and ensure all shipments leave the warehouse at

the correct time.

System-Directed Replenishment

As orders move through order fulfillment and picking, the slots will gradually empty.

When a given slot falls below standard levels, the WMS should generate an order to

the manufacturer. However, this generated order should consider whether a given

product will be in high-demand in the coming weeks. This will help account for

inventory flow fluctuations and customer-demands decrease and increase throughout

the year. The WMS should be designed to generate a reorder of product before the

product reaches minimal levels.

Vendor Compliance Programs

While an ideal warehouse would focus on incoming product from one vendor,

modern trade involves hundreds, if thousands, of potential vendors. A vendor

compliance program allows warehouse managers to ensure all inventory is brought to

the facility at the correct time, in the right quantity, and packaged appropriately.

Therefore, communication between the vendor and facility, a vital part of advance

notification, plays a strong role in ensuring accurate inventory flow and improving

efficiency in the warehouse.

For example, a warehouse may hire a vendor compliance manager to ensure all

vendors meet the facility’s requirements. Furthermore, this manager would

responsible for determining the percentage of vendors who comply with such

requirements and suggest improvements to poor-performing vendors.

Returns Management

Returns are an inevitable part of any warehouse management strategy, regardless of

efficiency and the implementation of best practices. Customers may decide to return

an item due to buyer’s remorse. However, the distribution center (DC) or warehouse

sees this as an additional cost.

To maintain efficiency and accurate inventory control, all returns need to be carefully

scrutinized for resale value, needed repairs, or return to the manufacturer. As a result,

a WMS must account for returns that will be able to be restocked in the appropriate

slot.

Flexibility and Evaluation

Errors will happen in warehouse management, and the warehouse team needs to be

ready to adapt to changes in processes. This flexibility allows a warehouse to meet

changing demands of vendors and customers, which drive all shipping processes. If a

problem recurs, the warehouse processes should be re-evaluated to determine if a

change in procedure will correct future problems. Maintaining flexibility is critical to

meeting demands in the global market.

Making a warehouse improve efficiency and maintain control of inventory flow

sounds simple. However, improving warehouse inventory management reflects

thousands of individual processes, and every attempt to curtail problems should be

considered, implemented, and adjusted throughout the shipping process. By following

these eight steps, a warehouse can improve their efficiency and gain more control over

their inventory. Inventory Flow Optimization is a vital part of the supply chain, and if

not maintained, then transportation is adversely affected. The best-laid transportation

management strategies are completely undone with improper inventory management.

Only as strong as your weakest link, as they say!

Chapter Three

6 AREAS OF STAYING STRATEGIC AND PROACTIVE WITH DISTRESSED SHIPMENTS

6 Areas Of Staying Strategic And Proactive

With Distressed Shipments

Opportunities for errors abound throughout shipping processes. Sometimes, these

errors lead to the failure to deliver a product on schedule, if the delivery even makes it

to the recipient at all. When a shipment fails to meet the expectations for delivery, the

shipment is considered to be distressed.

Distressed shipments account for the majority of insurance claims, returns of

merchandise, and poor customer feedback among shipping entities. However,

employing certain best practices for addressing distressed shipments can minimize

their impact on consumers. As a result, the customer-company interaction remains

positive, and the shipping company does not face the added criticism of failure to

provide accurate service. Let’s take a look at the six best practices for managing

distressed shipments.

Managing Driver Responsibilities

Drivers are the most influential factor in delivering a product in a timely manner. If a

driver fails to meet standards, such as failure to pass state-mandated inspections or

being prevented from leaving the loading dock on time, the expected time of delivery

is pushed back. Shippers can address this problem by effectively managing driver

responsibilities.

For example, the use of automatic logging systems and accountability tracking

software can reduce the opportunities for driver problems. Furthermore, these

systems allow drivers to focus on getting product from warehouse to the consumer.

Another example could be the use of sealed loads prior to departure from a given

distribution center or warehouse. Drivers should not sign off on a shippers load and

count (SLC) form unless the load is actually sealed. This will prevent shipping errors,

such as picking up an incomplete load.

Route Management

Distressed shipments often occur due to poor weather or inaccurate route

management. A shipper must ensure drivers have an up-to-date list of route

directions to ensure appropriate, timely deliveries. Furthermore, shippers should avoid

the temptation to require drivers to maintain a given route if another faster route can

be identified. However, secondary routes should not pose a threat to the freight, i.e.

the secondary should not cross state-lines if the initial route would have retained in-

state transport.

Real-Time KPIs

Throughout shipment procedures, shippers need to know where their shipments are

located, their current status of delivery, and how much time is currently required to

get the shipment to the destination. This is achieved through the use of real-time key

performance indicators (KPIs).

KPIs may include radio-frequency identification (RFID) chips, GPS-enabled tracking

systems, and real-time alerts to possible problems. For example, a tire blowout should

trigger an automatic notification to the shipper’s transportation management system.

If the estimated repair time is longer than the estimated time to get another driver to

the incident’s location, the shipper should consider deploying a second driver to pick

up the shipment. Although this represents an added cost to the company, it will

reduce the probability of dramatic impact and evolvement into a distressed shipment.

At Cerasis, we have recently implemented real time tracking using the driver's smart

phone application. The notification is sent right to our TMS or freight brokerage team

so we may easily give our shippers a heads up of any distressed shipments.

Use a Web-Based Transportation Management System

Some shippers may opt to use terminal-based transportation management systems

(TMS). A TMS monitors all current shipping activity in terms of docking and loading

times, departure status, distance to destination, and driver information. Unfortunately,

terminal-based TMS systems have the drawback of not being able to account for

multiple errors and events immediately.

When terminal-based systems are used, the chances of missing an update due to

location issues becomes more prevalent. Alternatively, web-based TMS allows the

shipper to access information from a given server on any shipment’s status information

at any location with Internet access. This is vital to ensuring accurate, up-to-date

information about a distressed shipment.

Delivery For Non-Available Deliveries

Modern delivery schedules rarely fall into perfect alignment with delivery recipients’

schedules. In many cases, this results in lost time during attempts to deliver a product

to an undeliverable (not at location) recipient. Traditionally, this would immediately

result in a distressed shipment; however, the issue can be addressed by improving

communication between drivers and delivery recipients.

For example, the driver’s phone could send an automated message or call to the

recipient to determine if the recipient will be available for delivery at the time of

leaving a current delivery. If the communication results in a determination of a non-

available recipient, the driver can make the decision to move forward to another

delivery recipient in the route. On the other hand, the driver could use a lock-box, such

as those offered by many postal services, to deliver the product on-time and advise the

delivery recipient of the appropriate action to get their product.

Effective, Efficient Claims Process

Regardless of the strategies used to prevent distressed shipments from growing in

severity, some distressed shipments will result in lost merchandise or revenue. In cases

where an item was incorrectly delivered or not delivered at all, the shipper needs to

have a specific, easy-to-understand claims process in place. This will make any possible

insurance freight claims efficient and reduce the impact on future business dealings

with a given recipient.

Similarly, some distressed shipments may result in a recipient canceling their order. If

such action occurs, the shipper must be prepared to accept responsibility for the delay

and its associated costs in transport. Some shippers may have specific rules for

restocking fees and return-to-sender shipments; however, these policies should not be

geared towards punishing the consumer if the shipping delay was the fault of the

shipper.

While a distressed shipment-free world in shipping would be ideal, human factors will

never allow this to be a possibility. However, improving technology and accountability

throughout the shipping process through the use of these seven tips can reduce the

number of distressed shipments and how distressed shipments impact a company’s

profit margins. Until shipping becomes solely dependent on robotics, including

robotically-controlled transport vehicles, shippers will need to educate their staff and

personnel on these tactics.

Chapter Four

5 AREAS OF TECHNOLOGY APPLICATION TO AID IN LOGISTICS VISIBILITY AND COMMUNICATION

5 Areas of Technology Application to Aid in

Logistics Visibility and Communication

As society grows more dependent on information exchange between companies and

customers, the issue of supply chain and logistics visibility becomes prominent for

companies. Modern shipping companies have cited visibility as one of their top

priorities for optimizing the supply chain. However, visibility is commonly

misconstrued as simply order tracking. However, logistics visibility actually can be

used to provide insight into daily shipping processes, adjust shipping practices to

account for changes in demands, and build stronger customer service relationships.

Take a look at some of the best practices for using technology to provide better

logistics visibility into shipments and monitor en route disruptions.

Consider Differing Fulfillment Models

Modern trade often crosses international boundaries, and trade across borders may

require upwards of 20 handoffs to get the destination successfully. However, some

products as part of a single shipment may also be coming from domestic locations.

To successfully monitor these processes, visibility tools should take international

versus domestic time requirements into consideration. Furthermore, this will help

reduce delays from issues in one type of fulfillment model.

For example, trade from a single port may become congested. If the logistics visibility

tools identify this congestion, incoming shipments can be diverted to a less-congested

port. As a result, disruptions and distressed shipments are lessened.

Assess Data Quality

Although data can be collected automatically across all shipment processes, the quality

of data greatly affects its ability to enact change across supply chain practices.

Unfortunately, part of the problem with using incorrect data lies with the assumption

of all data being of high quality. Warehouse managers should thoroughly screen and

assess the quality of data. However, the amount of data makes this aspect of data

collection and screening impractical for manual analysis.

An automated transportation management system (TMS) can effectively screen and

manage incoming data. Data which points to inefficiencies and potential disruptions

can be quickly located, flagged for input from a manager, and used to change the

supply chain practices. For example, data about weather delays could trigger the

shipment of the same item from an alternate location where the delay in shipping the

order would be less than the time required to get the original order from the area with

unfortunate weather to the destination.

Furthermore, customers will see what problems cause delays in their shipments. As a

result, customers will be less likely to contact the company about the order. However,

the potential to cancel an order for a delay always exists. This brings us to the next

point, enhancing logistics visibility back to the point of origin.

Point of Origin to Delivery Tracking

For international shipments, the point of origin of shipment comes under the scrutiny

of the US Customs and Border Protection (CBP). Failure to provide accurate point of

origin information about a shipment will result in delays, penalties, and possible denial

of entry to the US for international shipments. This represents a major disruption in

the flow of shipments across the supply chain. However, automated tracking and

logistics visibility from the point of origin eliminates this concern. As a result, imports

will suffer fewer setbacks and deliveries will be less likely to depart from the original,

estimated date of delivery.

Many different forms of automated tracking exist, such as RFIDs and bar codes.

Furthermore, robotic picking and shipping machines eliminate the human element in

processing an order. These automated processes can also be used to print and apply

shipping labels, which further reduces costs and possible delays in the shipment and

delivery of an item. Moreover, automated tracking helps ensure compliance measures

are met as required by the CBP. For example, import and export records can be

immediately accessed upon request or on a recurring basis to be sent to the appropriate

official at the CBP.

Gather Information in a Central Location

Although various methods and technologies exist for the tracking of shipments, the

information lacks value if not kept in a central location. The central location of data or

information hub provides companies with the opportunity to use correlations between

existing problems or delays to reduce future delays. Furthermore, the collection of this

data can be analyzed to determine how to best address a given problem.

For example, an information hub may contain data from ERPs, the TMS, and the

WMS. Ultimately, the information hub provides insight into all of the possible factors,

which may be affecting a given shipment. If shipment A has suffered a setback due to

a warehouse emergency, nearby personnel and drivers can be diverted to assist with

returning the warehouse to maximum efficiency. As a result, the shipments from that

specific warehouse can be returned to on-track status, which reduces distressed

shipments.

Online Shipment Tracking and Customer Service Relationships

Many modern retailers offer shipping status tracking services within their websites,

which helps drive traffic to the retailer’s site and improve customer service

relationships. However, online shipment tracking relies on information from the

respective shipper to ensure all information is up-to-date and reflects the accurate

location and status of the shipment.

To take advantage of this trend towards retailer-website tracking capabilities, the supply

chain must be willing to share data about a given shipment. Essentially, the entire

premise of logistics visibility rests on the concept of sharing information about a given

shipment. However, the sharing of data in this respect helps to build strong customer

service relationships, which enhance a business’s reputation and drive the supply chain

forward.

Visibility in the supply chain is the top priority for all involved in supply chain

processes. Visibility helps reduce costs across the supply chain by maintaining

communication between customers and businesses. Furthermore, visibility helps

reduce costs from penalties and delays when shipments become disrupted en route.

Ultimately, visibility in the supply chain is a tactic to save money and improve supply

chain efficiency by making an entire organization, not individual processes, accountable

for possible delays. As a result, customers will have a higher degree of satisfaction with

the service.

Chapter Five

6 BENEFITS OF APPLYING USEABLE DATA IN LOGISTICS FOR CONTINUOUS IMPROVEMENT

6 Benefits of Applying Useable Data in

Logistics For Continuous Improvement

Shipping processes revolve around a million-trucks-worth of data. Overused and

misunderstood in blog posts and informative articles, “big data” describes the use of

data to improve your operation, which includes shipping, warehousing, and supply

chain processes. However, the concept of data gets blown out of proportion when its

core functions can be broken down into simple, easy-to-implement procedures. Take

a look at how your data can be used for continuous improvement across your

organization.

Performance Management

Think about how your operation functions. Do all of your team members understand

and fulfill their duties appropriately? Are pallets and shipments picked on time and

without errors? Will an inaccurate picking result in one error for the original problem

or two errors for sending an incorrect product and retaining the original, correct

product in your inventory? Each of these situations represents an opportunity to use

data in logistics to improve your processes through performance management.

Performance management is basically how an organization manages potential

problems and maintains standards within the workforce. For example, drivers are

expected to arrive on time, maintain docking schedules, and avoid dead time. In each

of these situations, scorecards can be automatically filled out to reflect the problems

for specific employees or groups of employees on a given dock. This information can

then be used to determine disciplinary action or require additional in-service

requirements for such employees.

Furthermore, such methodology can be applied to vendor relationships. If a vendor

fails to deliver product as specified, the vendor may be advised of how future

violations will affect contractual obligations. However, you must exercise caution to

make sure you do not damage your vendor-shipper relationship. If a vendor

consistently appears to run behind schedule, you could change your delivery schedule

to reflect the times when the vendor is most likely to arrive as determined by previous

action.

Order Processing Capabilities

Using data in logistics to improve your processes does not necessarily require existing

orders and information from KPIs and metrics. Having accurate, efficient data

integration into your processes frees up additional space for the entry of new orders.

Ultimately, this leads to more orders shipped, which further drives demand for your

services within the supply chain. As a result, your business improves, and the amount

of data in logistics grows to reveal problems within your existing processes.

Increased Visibility

Since modern commerce demands exceptional scrutiny and visibility, data in logistics

can be used to pass information along to customers. This includes online shipment

status options and notifications for customers when shipments become distressed.

Furthermore, the same data can be used to identify other routes and solutions to avoid

causing an additional distressed shipment.

If your existing shipping processes involve international trade, increased visibility may

also be a concern for avoiding penalties, fees, and delays for violations of compliance

regulations. Having this data in logistics readily available can help clear up any potential

problems at the point of entry or port, which helps promote timely and less expensive

shipments across international borders.

Generating Accurate Forecasts

Using data in logistics to generate an accurate forecast of shipping processes sounds

complex. However, it’s only the application of historical data about given time frames

to determine your needs for a given event. For example, holiday forecasts in shipping

are often used to add more workers to loading docks, shipping centers, and

warehouses. Having more employees in place will alleviate the congestion from high-

volume times, which is the overall goal of data applications.

Metrics and KPIs

Monitoring shipping processes for inefficiencies rests at the core of data collection and

analysis. However, data in logistics can be further simplified by organizing it into KPIs

and metrics.

Metrics and KPIs should reflect real-time information about your shipping processes.

For example, a loading dock is behind on schedule, a driver has not yet arrived, or a

shipment lacks item A. Each of these bits of information can be used to change your

processes to address the problem. Basically, metrics and KPIs are a means of

preventing and addressing distressed shipments.

Metrics and KPIs may also be applied to performance management concepts to

maintain efficiency within your workforce. For example, errors in picking rates and

delays in picking procedures may warrant additional training of your employees.

Metrics and KPIs give insight into how your operations exist on an on-going basis,

which allows you to make immediate decisions to improve efficiency and workflow.

Cleaning Data in Logistics

Every transaction, scan, arrival, departure, and order processing method in shipping

generates data. However, some of this data in logistics lacks value in the overall view

of your transportation processes. Your company is probably collecting data on when

employees clock in, move between warehouse zones, and arrive to the dock.

Unfortunately, this data does not necessarily provide insight into how to change your

operation unless it has been cleaned.

Cleaned data refers to data that has been processed by a computer to eliminate

erroneous material. This helps you make decisions that will affect your current

processes without risking a negative change in other processes.

For example, uncleaned data may reflect a problem with warehouse zone A picking

times. You would be inclined to send additional workers to help with the problem.

However, cleaned data will show the problem occurred at a given time, how it was or is

currently being resolved, and what type of action will best benefit the situation. If the

data were uncleaned, you may have made a decision on the basis of outdated, albeit

only a few minutes of old information, data.

The application of data in logistics, transportation, and warehouse management does

not have to be complex. Instead, data can be applied to current, ongoing procedures

and processes to improve your efficiency and accuracy in your shipping tactics.

Furthermore, data provides real-time insight into how to change and address current

concerns and problems before they evolve into serious issues for your company.

Ultimately, you must accept data’s benefits as well as its flaws when uncleaned. Think

of data in logistics for improving transportation as your personal assistant in making

business decisions. Data can help you improve your transportation processes when

applied correctly.

Chapter Six

STRATEGIC LOGISTICS MANAGEMENT: THE IMPORTANCE OF FLEXIBILITY

Strategic Logistics Management: The

Importance of Flexibility

Flexibility within logistics management is crucial to maintaining efficiency and

accuracy in shipping processes. Flexibility is often misunderstood as more companies

move towards software-as-a-service (SaaS) models for transportation management

systems (TMS). However, flexibility refers to the scalability and adaptability within a

given system to improve the effectiveness of shipping processes. Take a look at the

importance of flexibility in a TMS and how it helps to drive improvement for

shippers through strategic logistics management.

Catalysts For Increased Flexibility

Scalability and demand from customers and suppliers have given rise to a new

demand for flexibility. In a sense, flexibility makes a TMS more flexible to change. As

a result, a flexible TMS allows a shipper to view potential influences in a shipment,

make adjustments as necessary, and maintain more communication between parties in

the shipping process.

Additionally, compliance and visibility concerns are driving the demand for flexibility.

Flexibility allows an organization to ensure compliance statutes are met. If a violation

occurs, a flexible system can identify how the violation occurred, what actions need to

be taken to resolve the issue, and how such issues can be prevented in the future.

Furthermore, a flexible system helps to increase control over incoming and outbound

shipments, which further drives shipping.

A final reason for increasing flexibility includes the unpredictability in shipping. Within

hours, the supply and demand for a given product may change drastically, and shippers

need to be able to meet these fluctuations. However, meeting such fluctuations means

keeping too much inventory on-site, which results in inefficient use of space. A flexible

TMS should consider historic data for time periods and changes in transportation

methods and devise a solution to address each problem. Once these solutions have been

proposed, a transportation manager can make a decision on which solution will be the

best way to approach a given problem. As a result, the overall scope of a shipper’s

processes will improve to meet the uncertainties of future shipping issues when

technology enables flexibility and yields strategic logistics management.

Core Components of Flexibility

Flexible and strategic logistics management includes three key means of improvements:

delivery models, functionality, and services.

Delivery models are primarily comprised of SaaS subscriptions, which can be expanded

or retracted to meet the company demands. Furthermore, SaaS TMS allows an

organization to reduce costs by identifying correlations between KPIs and similar data,

which results in more efficient processes and accountability throughout the process.

The functionality of flexibility is achieved by instilling best practices, such as those used

when a shipment becomes distressed, to enact change across a shipper’s business

processes. These tools should have the ability to change to meet the demands of the

shipper. For example, the TMS may gather data about a distressed shipment, advise other

shippers of the error, and devise a solution to prevent future problems.

Combining these factors into different services makes up the last part of a flexible

system. A given TMS should be able to perform benchmarking analyses, assess

transportation procurement, and change the overall program to enhance outcomes.

Traditional Flexibility Versus Modern Flexibility

Traditional flexibility meant adjusting delivery schedules to meet the expectations of

when drivers and shipments would arrive and be ready for processing. Modern flexibility

involves the use of data analytics to discern where problems arise and how such problems

can be addressed. Basically, this involves the eradication of data that does not benefit the

shipper, providing accurate logs of information to all parties in the shipping process, and

verifying all shipped materials are included in the shipment.

Furthermore, modern shipping includes the “break-apart” aspects of traditional

flexibility models. For example, shipping several smaller items via smaller trucks may be

more effective than shipping a single load across a given mode of transport. This move

away from tactical logistics management to strategic logistics management ultimately

achieves the goal of reducing waste, that is, reducing unnecessary cost.

Role of a Routing Guide in Today’s Strategic Logistics Management Powered

by TMS

Some shippers may feel a routing guide lacks a place in modern shipping practices.

However, the routing guide is actually all of the instructional materials, which are

typically built into a given TMS. The routing guide accounts for possible variables and

factors in transportation and advises individuals on how certain solutions will affect the

outcome of a given shipment. A flexible TMS must take an individual organization’s

goals and values into consideration in the creation of a digital routing guide.

The routing guide should not act as a single, unchanging resource for drivers,

distribution centers, and others in the shipping process. Instead, the routing guide must

grow to meet the changes and demands of customers and suppliers. If a given

shipment becomes distressed, the routing guide should identify the best way to access

the materials in the shipment. This is the integral concept and makes up a significant

part of an effective strategic logistics management program. The purpose is to get

products to destinations quickly and efficiently.

Adapting to change is part of human nature, and adaptability spans human civilization

and transportation processes. As a result, flexibility is an inherent aspect of all efficient

transportation processes. Since future needs in shipping are difficult to identify, without

considering data from previous events, a given TMS should be able to adjust to meet

different scenarios and demands. Ultimately, the use of data in a TMS is the driving

force behind improving flexibility and efficiency within a shipper’s processes ensuring

that strategic logistics management is an easier pursuit.

Chapter Six

WHY A SUCCESSFUL TRANSPORTATION MANAGEMENT PROGRAM IS EMPOWERED BY DATA

Why A Successful Transportation

Management Program Is Empowered By Data

Business practices have become synonymous with the application and collection of

data for continuous improvement. However, most of today’s data goes unused and

represents a lost opportunity to the company. Unfortunately, data lacks value if not

properly cleansed, transformed, and applied. Furthermore, some data may be of

minimal use without comparison to and identification of trends and collaborations

between data from other transactions within a given warehouse or transportation

system.

To survive in an increasingly complex, data-driven world, businesses must be ready to

implement new “Big Data” solutions to ensure all data is aggregated, analyzed, and

stored appropriately. Businesses are often left with questions about the origination of

such data. Take a look at how a business can use technology, metrics, and services to

improve transportation processes, which range from supplier shipping to route

optimization.

Origination of Data

Data originates from one of two primary sources: individual sensors gathering data or

manual entry of data. Both entries of data represent critical opportunities for errors,

especially when considering the human element of manual data entry. In automated

data gathering, which is driven by the Internet of Things through radio frequency

identification chips or other automated data capture, data is aggregated from

thousands of sources. However, this data is nothing more than a conglomeration of

information without a purpose. It’s up to the use of metrics and algorithms to begin

the process of breaking down the data for use in being able to improve your

transportation management program.

Manual entry of data carries an inherent risk of incorrect data transcription.

Unfortunately, the error may not be the result of the technician. If the data was passed

along incorrectly, or if data did not have any value in the company, the data entry

becomes useless. As a result, uncleansed, worthless data begins to take space within the

system, which could negatively impact the overall operation. For any instances of

manual data entry, the data should be double-checked for accuracy and importance. In

today’s data-driven transportation systems, data entry should primarily be an automated

process. However, exceptions to the rule of automated data entry will always exist.

This is where metrics becomes necessary for the analysis and monitoring of data.

Metrics

In a sense, parameters may reflect the individual data capture points. However, metrics

may also be applied to the algorithmic analysis of data to identify what data needs to

be removed, clarified, or analyzed in further detail. Additionally, metrics reflects

decision capability by real-time data information.

An Example of Data Collection and Metrics in Logistics and Transportation

Management Program Processes

For example, incoming deliveries may be delayed due to inclement weather. Data

originates from within the truck’s GPS to relay information about the delay to the

corresponding destination. The warehouse or distribution center may then alter

services to reflect the change in loading or unloading schedules. This data is then

stored in a specified location to begin the analytics’ process. Afterward, the data may

reveal problems at the originating distribution center, which caused a minimal delay.

Unfortunately, this minimal delay resulted in the truck’s encounter with the inclement

weather. As a result, the destination center may implement corrective actions at the

originating center to prevent this issue from occurring in the future. Ultimately, the

entire process becomes more efficient with the collection, analysis, and actionable

qualities of data.

In this example, a company may feel the aspect of metrics were left out. However,

metrics is the information given to the company by data analysis. In the example, the

metric showed a consistent delay at the originating center, which was corrected.

However, metrics may be used as key performance indicators to monitor a given

location’s activities. For example, the originating center may have order automated

tracking and processing sensors in place to immediately detect a delay.

Data Management and Transportation Services

Regardless of technology implementation, the human element of improving your

transportation management program must exist. Customers may want to speak with

customer service representatives, and some orders will come in person. However, this

does not mean automated processes, metrics, and real-time data collection, analysis,

and use in decisions will be eliminated for these transactions.

Today’s transportation providers must understand the value in big data analytics’

services. These services act as the initial point of improving efficiency across the entire

transportation network. Although we mentioned using historical data in making some

decisions, real-time feedback enables decisions to be made by current actions.

Essentially, this eliminates the “what if this happens like it did in…” hypotheses in

transportation.

When an organization or transportation company uses these services, the organization

will see an increase in profitability through reduced overhead costs and increases in the

efficiency of its workforce. As a result, more customers will be pleased with the

organization’s services, which will further drive demand for the transport company’s

service. This becomes a self-fulfilling circle of order fulfillment at lower prices.

The world of transportation management is constantly evolving, and today’s

transportation management systems must adapt to the chaotic events of daily life and

business practices. By using data efficiently and accurately, a company can grow beyond

expectations while providing superior service at more competitive rates. Through the

use of metrics, people, and services, today’s shipper will reap the rewards of an

investment into technology and “Big Data” analytics to continually improve their

transportation management program.

Chapter Eight

HOW EFFECTIVE LOGISTICS AND TRANSPORTATION MANAGEMENT LEADS TO SCALABILITY

How Effective Logistics and Transportation

Management Leads to Scalability in Business

Operations

Regardless of current size, growing a business remains one of the primary goals of

any company. However, businesses often forget about the role of effective logistics

and transportation management for improving day-to-day business operations.

Ultimately, having the right system in place is the defining factor between a stale

growth rate and expanding current business size. Take a look at how effective logistics

and transportation management systems lead to scalability in business operations.

Scalability to Take on More Orders

When a business’s existing system reaches capacity, the ability to enter more orders

and generate a profit become hindered. The capacity of a current system is

comparable to a speed limit for business. If the business operates at maximum

efficiency for the current system, the total amount of revenue will never exceed this

threshold. However, increasing the efficiency within a system enables more orders to

be fulfilled and open up space for additional orders. Unfortunately, many current

systems rely on inherently inefficient processes and do not take advantage of

advanced management tools to improve overall effectivity.

Automated Transport of Items Within a Warehouse

An efficient transportation management system integrated into an ERP or WMS

considers all possible variables within a warehouse. These variables may include

current stock amounts, distance to travel from storage slot to pallet, and amount of

time to load the merchandise. As a result, each of these processes should account for

the most efficient processes in the warehouse.

For example, items from slot A should be located near similar items, which may be

ordered by the end-user concurrently, to reduce the amount of time needed to move

items from slot to loading zone. Therefore, the amount of time spent picking the items

is reduced.

An effective management system must take these aspects into account during sortation.

Fortunately, these events are cataloged automatically to ensure merchandise moves the

least amount of times within the warehouse, which reduces length of time in preparing

a shipment and helps workers adhere to dock schedules.

Flexible Shipping Processes and Scalability

Today’s customers have been given access to an unprecedented array of differing items,

which may vary from hazardous materials to delicate clothing in the same shipment.

Although this practice is beneficial for customers, it remains an issue for lost efficiency

and errors within the shipping process. How does a shipper conglomerate all of these

different items into a single shipment without risking damage or injury? The answer

rests with attaining a flexible, smart system.

A flexible system allows shippers to quickly sort existing stock and compile shipments

on smaller units. These individual packages are then added to tubs or containers slotted

for less-than-truckload shipping to help move goods fewer times while reducing the

number of times a worker must handle the product. By maximizing the use of space in

an existing fleet to meet the demands of many different-sized items, a shipper can

improve efficiency and flexibility.

The idea of flexibility due to improved processes leads back to inherent savings for

labor costs as well. If individual workers are needed less for business operations, this

means existing worker’s would have reduced workloads. This results in higher employee

satisfaction rates and savings for the company on overtime hours or hiring additional

workers.

Scalability and Retraction of Business Processes

Sometimes, scalability is only associated with a business’s growth. However, all

businesses will suffer from the setbacks of fewer orders, reduced demand for products,

or changes in the economy. Each of these factors could spell disaster without an

efficient logistics and transportation management system.

If an existing operation has an excess of workers, a reduction in orders would lead to

cutbacks across the entire enterprise. If the company’s production suddenly increases,

previous employees may be unavailable or less inclined to work for the company.

Unfortunately, every terminated or reduced-salary employee represents another

possibility for the company to lose money.

Efficient Systems and Inventory Control For Scalability

Managing inventory in one location can be difficult; however, managing inventory in

multiple locations becomes even more costly. An efficient transportation management

system must be able to handle the addition of new inventory, users, and new locations.

Without the ability to expand across multiple locations, an existing system would be

incapable of effectively monitoring and managing a company’s inventory.

Similarly, inventory control is an important concept in the management of a single

warehouse. Inventory control allows an organization to increase or decrease stock

counts to meet the expectations of a given shopping season. For example, summer

items will need to be increased during the warmer months, and holiday-themed items

may need to ordered and stocked prior to the arrival of fall. The management system

enables accurate inventory control through forecasting, which is the creation of reports

for the expected needs of an upcoming time period. By analyzing order trends and

current processes, the transportation management system can evaluate the company’s

needs and adjust business processes to meet the demand. Essentially, the overall

workload of inventory control is reduced as it pertains to scalability concerns.

Throughout the course of business, the demand for a shipper’s services will change.

Sometimes, business will be in high demand, and at other times, business will seem to

crawl at a snail’s pace. The overall goal of any logistics and transportation management

system is to improve efficiency while maintaining optimized operations. By

implementing an efficient system, the business can reduce or expand operations to

meet customers’ demands.

Chapter Nine

5 BENEFITS FROM LOGISTICS SUSTAINABILITY & EFFICIENCY

5 Benefits from Logistics Sustainability &

Efficiency

Driving business growth and reducing overhead costs remain the top priorities of any

business. Many business owners fail to connect these two functions to logistics

sustainability. Usually, sustainability is applied to ensuring operations do not negatively

impact the environment. However, achieving sustainability revolves around reducing,

not eliminating, the causes of environment problems. Instead, a sustainable solution

in the transportation industry focuses on improving individual operations and

movements to increase the efficiency of transportation. Obviously, a shipper cannot

actually control everything, but it can control how its companies’ products make it

from location to location. Let’s take a look at how logistics sustainability lowers a

company’s carbon footprint and increases customer affinity for your brand.

1. Reducing Emissions

Since the transportation industry involves the shipment of goods from one location to

another, the basic responsibility of reducing carbon emissions takes priority. Many

vehicles run on fossil fuels; however, implementing a “green” solution to today’s fleet

could mean the difference between a low and high carbon footprint for your company.

Today’s transportation industry experts understand how each mile of travel represents

additional emissions into the atmosphere. By reducing the overall number of miles

driven, the total amount of noxious gasses released is reduced. Consequentially, the

company can benefit from not having to pay excess fines or penalties for violations of

environmental regulations, which depend on the location of the respective shipper.

Furthermore, streamlining transportation options through high-efficiency means, such

as ocean transportation or transportation in electric vehicles, enables a shipper to create

an effective, sustainable solution to transport many goods across great distances.

2. Reducing the Amount of Waste Products

When thinking about transportation costs, the primary cost seems to always reflect fuel

costs. However, each vehicle contains thousands of parts, gallons of oil, and at least

four tires, which are all designed to wear out over time. Each of these products has a

finite life expectancy, and inefficiency in transportation will only result in the

replacement of these items at a faster rate. Unfortunately, this increased rate represents

the loss of sustainability within a given transportation company.

For example, driving with an empty truck from a destination to a distribution center in

another state creates many forms of waste. The life expectancy of all of the materials

in the vehicle are cut in half immediately without any benefit to the company. This

does not even take into account emissions nor wear on national roadways. Every

movement costs money, and some of these costs are not even the responsibility of the

company, such as damage to roadways. However, each consequential action, such as the

repairing of the roads, results in additional energy expenditure somewhere. As a result,

the company’s carbon footprint grows more with each movement.

3. Reducing the Amount of Energy Consumed

Speaking of energy, the amount of energy used by a shipper reflects its logistics sustainability. If

a shipper opts for a faster mode of transportation with a greater cost to the environment, the

consequences could easily outweigh the benefits. This is the great conundrum of the

transportation industry. The fastest option is not always the most efficient, yet the most efficient

option is usually the fastest.

It really does not seem like it makes sense, but by making small changes in the amount of

energy used across the board, from loading to packaging to transporting multiple parcel

shipments to go via the LTL mode, a company can get products delivered on time without

increasing the carbon footprint. Obviously, some customers will continue to expect immediate

or priority delivery. However, shipping a single item is inefficient. Shipping multiple items by

consolidation could be less damaging than shipping 20 different items in 15 different trucks

across multiple states. Essentially, the less time must carry a savings equal to or greater than the

cost of using the less efficient method.

4. Alignment With Governmental Regulations and Goals

Depending on your company’s location, you could face many different environmental

regulations and statutes for the production and shipment of your merchandise. If you fail to

achieve logistics sustainability, i.e., using logistics to support a certain level of sustainability, by a

specific degree, you could be on the hook for fines, penalties, and additional criminal or civil

consequences. Government-driven regulations have a basic goal of ensuring future generations

the resources to survive, and you have a share in this responsibility. Not only will you save

money by achieving sustainability in shipping costs, you can avoid these potential consequences.

5. Increasing Awareness Among Customer Base

Consumers are becoming more conscious about the type of products they buy and how the

respective sellers operate. The modern world and social media has made sharing information

about a company’s activities part of the lives of millions of customers, and your company’s

image depends on your honesty and role in achieving a sustainable future.

A few poor decisions could lead to massive backlash and boycott across social media channels,

and your business could fail. By using a carrier or 3PL focused on logistics sustainability and

optimization with proven sustainability practices in place, you can help minimize the scrutiny of

your operation and improve public perception of your company. Across geographic and

political barriers, customers are gaining more knowledge about how your company operates.

Sustainability seems complex, yet it’s simply taking today’s actions and improving them to ensure

plenty of resources for the future. Many logistics sustainability measures may require significant

investment; however, the rewards will exceed the costs. Your customers will view your company

with trust, and millennials will play a significant role in this process. Authoritative organizations

will not hand out penalties for violating environmental codes, and your business will thrive if

you follow a path to sustainability. Customers have an affinity for protecting the world for future

generations, and your brand has affinity for gaining more customers. Can you afford not to

become a partner in achieving a sustainable world?

Chapter Ten

5 ENGAGEMENT STRATEGIES IN MANAGING A RELATIONSHIP WITH A 3PL

5 Engagement Strategies in Managing a

Relationship With a 3PL

Prior to selecting and throughout your dealings with a transportation management

3PL, you will need to learn a few management and engagement tactics. These tactics

enable the relationship between the 3PL and your company to grow and prosper.

Unfortunately, failing to maintain this relationship is at the heart of many failures in

supply chain processes. To help make keeping this relationship engaged and managed

well, take a look at five things you will be responsible for.

1. Set Expectations at the Beginning.

Expectations are the catalyst behind all business decisions. Your expectations for your

business as a manufacturer or distributor are to improve production, satisfy your

customers, and grow. Similarly, the expectations for a 3PL will mirror and enhance the

needs of your supply chain. Yet, expectations can be difficult to explain and manage.

Before selecting a transportation management 3PL, explain your expectations for how

the 3PL’s services will improve your business. Define what type of services you want,

need, or have considered previously. Explain how your current processes work, and

listen to feedback from the 3PL. Furthermore, the 3PL will expect you to be

completely honest in your expectations, so do not feel the need to withhold

information. In fact, many 3PLS will ask you to sign a non-disclosure agreement

(NDA) to keep all parties’ information safe, private, and secure.

2. Communicate Often and With Many Different Representatives.

Often, business owners gravitate towards a particular representative of the transportation

management 3PL. This is based on initial interactions between the 3PL and each business.

Human nature makes others seek out familiar faces and personalities. However, withholding

communication from other people in your 3PL is only a hindrance to your business.

Additionally, some business owners fail to recognize the value in communication. With

advanced technologies, dashboards, and KPIs in place, communicating with a 3PL may seem

irrelevant. Why would the 3PL want to communicate when you can see all of their information

at a glance? The answer lies in continually improving your business processes.

Try to create a communication schedule, which contains specified times for meetings,

conference calls, or email notifications, at the onset of selecting your transportation

management 3PL. Furthermore, your master service agreement (MSA) should contain the

contact information of your primary representative and others in the 3PL who can benefit your

business.

3. Constantly Think About Risk.

Risk management is a huge part of an effective transportation management strategy. What

happens in the event of a disaster? How would the transportation management 3PL respond to

ensure the timely delivery and operation of your outsourced processes?

Your 3PL should be willing to explore all of the potential “what if ” scenarios. You should have

an intricate understanding of what the 3PL will do to ensure all of your processes are not

affected. Some of these scenarios may seem extreme, but you need to think about the overall

goal of driving your business forward.

If you feel the 3PL’s plan for addressing a particular issue does not stand up to your company’s

vision, say something about it. Each risk mitigation plan can be altered and improved, and your

3PL respects your input into the creation of these plans. However, staying silent will only lead to

disappointment and distrust, which undermines the value of hiring a transportation

management 3PL in the first place.

4. Enact Change Management and Training.

Your employees work for you. They have spent countless hours training and working to ensure

your company survives and grows. However, employees may be unwilling to trust your decision

to outsource supply chain processes, such as transportation management, to a 3PL. This is

where change management comes into play.

Change management reflects how you influence the change of current processes through your

employees. This may include seminars, webinars, conference calls, and training sessions. Every

interaction in your business represents another venue for effective change management. If your

employees do not embrace the forthcoming changes, managing the relationship between your

company and a 3PL will be much more difficult.

If you feel your employees will embrace the change, work to show them how the change will

benefit the company. You may be tempted to curse, scream, or yell about certain changes, but

your employees will be watching your behavior for how to act. If you experience stressors or

feel under pressure from the 3PL, do not give the employees a reason to doubt your rationale.

Your transportation management 3PL is meant to make things easier, not harder.

5. Do Not Impose Limitations on Your Selected Services.

In business, it can be tempting to avoid making purchases, entering long-term contracts, and

trusting others with your company’s responsibilities. However, going beyond these limitations is

crucial to the success of using a 3PL. As a result, your company must be willing to adapt to

changes in 3PL structure and processes, which will benefit your business.

Similarly, you must be willing to take a proverbial gamble on your 3PL. Sometimes, the goal may

not seem visible, and in some cases, the goal may appear impractical. However, the 3PL’s

success depends upon your success. If the 3PL fails to achieve increased production and

improvements in your supply chain processes, the 3PL loses money. Therefore, you can safely

believe that all decisions will reflect your best interests, even when they do not appear to.

Learning more about how to effectively manage a relationship with a transportation

management 3PL marks the beginning of a journey of increasing your supply chain processes.

However, this journey is not without risk, and a 3PL is designed to reduce this risk by constantly

working with you to increase production. Above all else, think of your 3PL as an extension of

your employees. Without your business, a 3PL would not be possible. Without a transportation

management 3PL, expanding your business may not be possible. By following these five tips,

you can stay engaged and maintain a positive relationship with the 3PL of your choice

Chapter Eleven

5 CHANGE MANAGEMENT TIPS TO CREATE A STRATEGIC MINDSET

5 Change Management Tips to Create a

Strategic Transportation Management Mindset

After deciding to use a third party logistics provider (3PL), you may be tempted to

continue operating as you have previously. Unfortunately, failure to make and

embrace changes will lead your organization to failure. Changing current processes

requires time and willingness to change, i.e. you must embrace change management.

Historically, consumers were driven to purchase by defect-free products and

unmatched customer service. As the world has grown more reliant on efficiency, a

shipper can no longer rely on defect-free product sales. Instead, the shipper must

change processes to reflect increases in productivity across the company. Fortunately,

many different models for increasing the value of change management exist. Take a

look at some of the most important ways to achieve successful change management

and increase efficiency, which remains the goal of all 3PL-partnered entities.

Identification of Needs Must Be Completed First

Initially, you must review your current shipping processes to identify problems and

areas that can be improved through change management. However, you must ensure

your organization does not violate any applicable rules and regulations, such as ISO

requirements. These needs do not necessarily reflect physical needs entirely.

For example, your employees may need additional resources, such as increased

accessibility to processing terminals or additional training, to make the appropriate

changes. Alternatively, some other needs focus on revealing information about your

business. Your 3PL will need to thoroughly review and assess your current processes

to identify what actions will be most appropriate for your specific organization. This

requires a great deal of trust between the 3PL and your organization. However, you

must also think about your employees’ perception of the change.

Helping Employees Understand Change Management

On the surface, using a 3PL may seem like a dangerous move to your employees. Essentially,

you are outsourcing some of your business practices to reap higher profits in today’s

competitive market. Your employees may view this decision negatively, so you must help them

understand the rationale behind the change.

You may hold additional training sessions on why your organization is retaining a 3PL. Explain

how the 3PL’s presence will increase productivity while reducing the stresses of current

employees. Furthermore, your employees must feel secure about their positions. Reiterate how

existing employees’ positions will remain intact or change to meet the improvements in your

organization.

For example, employee A’s typical job duties may be lessened by a 3PL; discuss what other areas

of your organization employee A may be interested in. This allows all employees to maintain

satisfaction in the workplace while embracing change management. However, you must not take

a one-size-fits-all approach to change management. You may communicate changes to your

employees in a variety of ways, but the key to successful change management rests with

maintaining clear, consistent, and frequent communication without your employees throughout

your unique organization.

Be Realistic About Changes

One of the most common misconceptions about using a 3PL is that there is an immediate

return on investment and elimination of all inefficient business processes within days.

Unfortunately, this mindset does not reflect an accurate description of a 3PL. Sit down with

your staff and 3PL, and clearly communicate what changes you hope to accomplish by using the

3PL. This may include decreases in dead time, increased shipping capacity, and reductions in

problems with inventory management.

Similarly, you must not be tempted to have one person responsible for all communication in

your organization. When considering the hire of a 3PL, your employees will probably hear

about the possibility before you ever made the decision. Ultimately, this will lead to backlash

about how quickly the changes will take place and how your existing staff will be able to adapt.

As a result, the role of your communication efforts will become even more prominent.

Increase Visibility in All Practices

Visibility drives efficiency for partnering with a 3PL. However, many executives, managerial

staff, and employees may feel existing systems maintain the most visibility possible. If your

organization has not revealed anything about everyday activities, you do not have an acceptable

degree of visibility for successful change management.

Think back to the issue of trust between a 3PL and your organization. Why would your

organization feel some information should not be shared? Does it revolve around proprietary

information, or do worries of layoffs exist? Each of these questions reflect common

considerations when preparing for change management. However, visibility is critical to

ensuring all processes are addressed and improved. If you do not disclose information about

everyday processes, you open the doors to unsuccessful change management and reductions in

the return on investment for using a 3PL.

Apply a Structure to Your Change Management.

With all of this information, it will be easy to feel overwhelmed and lost. However, you must

apply a structural model for achieving a successful transportation management strategy with a

3PL. This structure varies from organization to organization, and your structure can be mired

from existing models to innovative ideas from your employees for increasing efficiency and

change management. If you stay vigilant and maintain a set structure, the overall efficiency of

change management will be increased.

Logistics are both complicated and simple. Change characterizes the simplicity, yet changes also

reflect intense complexities for all members of your organization. When thinking about gaining

a competitive advantage and increasing your strategic look for transportation management, how

you embrace change affects the accuracy and return on investment of partnering with a 3PL.

When you clearly communicate, embrace, and reinforce these changes, across your organization,

you can increase productivity and eliminate waste where it lies. Your organization must be ready

to pivot to make these changes. How you do it should be clearly, methodically, and consistently

approached with caution and enthusiasm.

CONCLUSION

Staying Strategic to Execute Flawlessly

As any business executive can attest to, strategy is vital in order to achieve the desired

outcome of the corporation. In order for a business to further reach those goals, each

function of the business must have a strategy and stay strategic in the way they

approach that function. When it comes to the vital importance of transportation and

logistics management, it is no different. Strategy will allow a shipper to better

communicate with all of those involved in the shipping process. Staying strategic in

shipping instills confidence in those manufacturing products as they are sure to

receive materials in time. It also makes customers feel as if they are truly taken care of

and not simply responded to. In turn, this confidence makes your sales staff more

confident in getting new business. Simply, a strategic mindset makes the execution of

a business flow much easier and thusly creates a competitive advantage.

Some shippers may have the resources in house today or feel confident about the

sustainability of those resources. Some shippers do not have those resources at all and

feel at a competitive disadvantage. As laid out in this e-book however, no matter

where a shipper is in their logistics and transportation management functions, it is

important to survival to get to a strategic mindset. Often, leaning on a third party

logistics company can give you that competitive edge you seek..

We hope you enjoyed this educational e-Book on how staying strategic in logistics and

transportation management gives you a competitive advantage as a shipper.

Cerasis, a transportation management company founded in 1997, has always believed in the use

of technology to improve process to not only reduce cost but to stay strategic, competitive, and

have the ability to use data from technology to continually improve. In fact, one of our core

values is just that: continuous improvement of our people process and technology.

We built our Cerasis Rater TMS in 1998, launching it as web-based before Google was even a

business. Our (now Army, as our Development Manager, Jerel Byrd calls them) development

team are always continually improving the Cerasis TMS, as we know it is vital to have a system

that is not only innovative, but sound, secure, and enables those in transportation to do their job

all while doing it cost effectively.

Are you using a TMS to help manage your transportation department as a shipper? What are

you seeing in the space?

In addition to our transportation management system (TMS), the Cerasis Rater, when you are a

Cerasis shipper, you gain access to the following managed services:

• Transportation Accounting to include: Invoice auditing, one weekly invoice no matter

how many shipments, and freight payment services

• Comprehensive end to end freight claims management: if your freight is damaged or lost,

we will handle the freight claim on your behalf

• Carrier Relations: We will negotiate rates on your behalf and you get better rates thanks

to our buying power

• Inbound Freight Management

• Reverse Logistics

• Robust Analytics and Reports

Want to learn more? Visit http://cerasis.com

Learn More

Get a Demo of our TMS or Inquire

About Our Services