Those of us operating in the supply chain world have likely become used to thinking of transport as being synonymous with logistics. However, in so doing, we’re missing a vital area for improvement in our overall supply chain. If we can see transportation as one facet of logistics, we can hone in on it to refine it as a distinct part of the chain. We can bring about efficiencies that will serve the chain as a whole. We know logistics as a whole have undergone a seismic shift over the last decade due to advances in technology. What if we look at how to improve transport specifically?
Transport – Taming the Beast
The old-school issue with transportation within the supply chain is that it was a loosely governed, not very visible endeavor, yet ate up as much as 70% of all logistics costs. Whether transporting parts or the finished products we’d wave off our wares and hope they’d turn up in the right place, at the right time, in the right way. That’s a whole lot of luck being pinned on the process.
In many ways, transportation within the supply chain was a law unto itself. Not governed in the same way, with the same fine tuning, as the factory floor, for example. It was often a highly distinct being, away from the main tenets of the chain.
The modern supply chain simply cannot function with a beast in its ranks anymore. The UK has the 7th-highest fuel costs in the world and transport is one of the supply chain’s biggest expenses. The margins for efficiency savings are now so fine, with customers more in control and with higher expectations, that we can’t afford to leave the transportation element to luck.
How to Improve Transport in Logistics
Knowing we need to improve transportation is one thing. Knowing how to accomplish this is another. After all, we can only work with the infrastructure we’ve got. We need to get our goods from Point A to Point B cheaply, and reliably, without a sacrifice to either. Making efficiencies here can be the difference between us being competitive, or not.
The single biggest way to improve transportation is to improve its responsiveness. To do this, an overall strategy needs to be implemented which is two-pronged: reducing costs whilst improving customer service. These two elements aren’t exactly the easiest of bedfellows, and changes in one can often impact on the other.
However, this is where technology can be used to your advantage. Through technology, it is possible to increase visibility – the foundation of improvements. If we can see what is going on with our products from the start of the chain, through every transportation process within, to its end point, then we can pin point where efficiencies can be made. Think of this in terms of inventory management alone. With increased visibility, inventory management can be much more finely tuned. Uncertainty can be managed.
How do we do this? Well, either we utilize existing tracking, routing and dispatch technology solutions, or we develop our own. The return on investment is always worth the initial outlay. Alternatively, we take a different route altogether and realize that transportation as part of logistics is as much a specialist area in itself, that the simplest way to tame the beast is to outsource it to precisely that: a specialist.
Outsourcing Transport – Routing and Optimization
The reality is that transportation hits the supply chain hard in terms of costs, and is an unwieldly beast to manage. Outsourcing, contrary to what you may initially think, actually puts you back in control of the costs and the beast itself. This is most true in the field of routing and fleet optimization.
Very few businesses are truly big enough, with a wide enough outreach, that they can maximize efficiencies by bringing their transportation in house. Capacity, load configuration, customer expectations – none of them allow for that. The numbers simply don’t add up.
The ultimate goal of transport routing is to minimize route time or distance, whilst maximizing vehicle fill and reducing assets. A tall order indeed, if you don’t outsource.
Seeking expert consultancy can be an efficient first step toward improvement, as these firms have their own tools and strategies, as well as access to specialist third-party software, to create the most efficient transportation operation. You get all of the benefits of insight, with improvements made that reverberate up the chain.
What Else Can We Do to Improve Transport in Logistics?
Outsourcing is the single biggest way of moving the transportation yoke from around the supply chain’s neck. However, understanding how they do this will help you realize how outsourcing represents a valuable return on investment.
Technology is the big whammy. The refined and top-of-the-range tools and software to create efficiencies in the transport area are sophisticated, and continually evolving. They offer visibility that brings with it control, and the ability to optimize. Supply chains have been somewhat slow to embrace technology in transportation, but consultancies have realized their potential in real terms.
Then there are some smaller, but valid, improvements that can be made.
By understanding the way we handle transportation, we can quickly make some greater efficiencies. If we are frequently shipping small parcels that don’t fill trucks, or other freight means, then we’re paying for wasted space. By changing routes and considering different transport modes, we may be able to reduce this.
Similarly, how much air are you paying to ship? If your packaging isn’t the right size for the job then you’re effectively paying to move air. Given that much in transportation is now charged by size, you simply can’t afford to use bigger packages than necessary. It may be worth considering on-demand die-cut packaging.
It’s also important to consider how you may be transporting Good X from point A to point B (your warehouse) before sending it on to point C (the customer). Is it perhaps possible to cut out the middle stage and organize deliveries direct from source to customer?
Improving Transport, Improving Logistics, Improving the Supply Chain
When we examine transport as a distinct facet within logistics, then we can make even greater efficiencies throughout the entire supply chain. Outsourcing to logistics and supply chain consultants is an easy and cost effective solution.
What tips do you have for improving transport logistics?
Guest Blogger – Paul Trudgian
Paul owns and manages Paul Trudgian Supply Chain & Logistics Consultancy. He is a specialist in inventory planning, logistics network design, logistics outsourcing and demand planning. Paul is an experienced program leader with a proven ability to design, manage and drive critical reductions in operating costs and capital investment. He has delivered in excess of 60 consulting projects in the retail, defense, automotive, food, utilities and mining sectors for both major multinationals and SMEs.
Header Photo: Milos Muller/shutterstock.com