In the movie The Cable Guy, Chip Douglas refers to cable television as the “information superhighway.”   “There’s no end to the possibilities!” Chip says. I feel like Chip when it comes to software and technology in logistics. Although I wouldn’t call it the “ultimate aphrodisiac,” using software can help you manage your transportation better than ever.
It still amazes me how many companies — large ones at that — are not managing their parcel spend. I recently met with a company whose accounting was so decentralized that no one knew anything about their parcel spend. If you’re reading this article, you’re certainly not that type of organization. But whatever stage you’re in, software is necessary for building metrics used to manage transportation.
I’d like to give specific examples of software features and metrics that will help you in three areas — strategic planning, contract negotiations and opportunities for improvement.
Strategic Planning
Whether it’s creating a budget for your shipping spend or more complicated sales and operations planning, shipping and invoice data at your fingertips is critical. Many freight audit companies provide shipping dashboards of your historical data. Some of the better ones allow you to enter your budget data to track and compare budget vs. actual performance on the dashboard.
Budgeting and planning is easier when you have interactive dashboards with at least 24 months of historical shipping volume/spend. If it’s dashboards or reports from a data warehouse, the benefits of data go beyond transportation planning and budgeting.
Contract Negotiations
Using software for creating metrics provides a basis for negotiating supplier contracts and agreements. Data is king. Have you ever been in a negotiation when you run circles around the supplier because you know the data better than they do? It’s exhilarating!
Building a “parcel profile” is the best way to accomplish this for the negotiation process. Building your profile consists of: weight and zone distribution, service level utilizations, remote areas and ground transit times — just to name a few.
Improvement Opportunities
Software can be used to standardize the carrier invoice data. UPS, for example, is notorious for inconsistencies in the data. Once standardized, you can view the true cost of a shipment, drill down on accessorial charges and compare carrier bids easier. Software also allows opportunities to automate accounting functions like GL coding, freight accruals and much more.
So how do you access tools like this when your company is scaling back? If you’re using a freight payment service or parcel audit company, ask them for these types of tools. Many will be happy to customize something for you. If they don’t have the ability, shop around; there are several out there that do, and many of them don’t require upfront costs.
Software can help you build metrics to better manage your transportation and reduce your costs. In times like these, it’s desperately needed. Remember, there’s no end to the possibilities!
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Rob Nelson is the founder and President of Logica. He can be reached at rnelson@logicacorp.comor at 801-878-8480.