Automating to boost performance

MM&D MAGAZINE, SEPTEMBER/OCTOBER 2011 PRINT EDITION: Top-rank shippers have used transportation spend management solutions and process improvements to control costs and maintain high carrier and freight performance levels, says a recent survey from research firm Aberdeen Group.

The report, Integrated Transportation in a Capacity Constrained Global Market, notes the best-performing companies were able to decrease their baseline freight spend by 2.5 percent over last year as well as complete 97 percent of orders on time. Also contributing to their success, those companies measured their performance an average of 68 times a year, compared to the industry average of 20 times (and 15 times for industry laggards), the report notes. Through their efforts, they were able to reduce transportation cost per handled unit by 2.5 percent.

“The two biggest problems companies face, despite the availability of technology and solutions, are the lack of ability to tightly control transportation costs and the lack of ability to compete for constricted capacity,” the report notes.

More than 53 percent of survey respondents wanted better visibility into their costs, with over 51 percent investing in technology to gain better shipment status visibility. Overall, 65 percent are looking to invest in processes or technology over the next 12 months.

What are best-in-class firms doing so well? The survey reveals they’re more than twice as likely to automate functions such as multi-shipper continuous move inbound-outbound transactions and information exchange between suppliers and inbound carriers. They were also more likely to automate freight audit, dynamic supplier routing instructions and Customs filings.

As well, collaboration is key. More than 70 percent of companies indicated collaboration was important to their supply chain strategy. “When it comes to process, companies of all classes have begun to harness technology in a collaborative fashion both internal and external to the organization,” the report reads. “But the best-in-class are doing a superior job.”

The report showed companies shared characteristics across five categories: process; organization; knowledge management; technology; and performance management. Best-in-class firms routinely came out on top in each one.

For example, in terms of process the report notes the highest-performing firms were more likely to be able to make supplier-distribution network realignments and respond almost in real-time to events. In terms of organizational management, best-in-class companies more often had a well-equipped staff, skilled in dynamic routing of international shipments, and they also shared shipping schedules with other companies.

For knowledge management, best-in-class companies had warehouses that boasted visibility into outbound freight schedules and customer service visibility of those schedules for improved order promising. Those companies were also more likely to use various technologies, such as supply chain visibility software, b2b collaboration software and contract management software.

“It’s truly a combination of superior and balanced performance across each of the sections that denote the overall level of transportation success,” the report said.

The report suggests strategies to improve per-formance. For example, industry laggards can improve staff proficiency in areas such as global dynamic routing. As well, companies that fall within the “average” category can work on collaboration. “Collaborating to combine data into a global view will greatly increase spend analysis, value-add opportunities and, finally, sharing with external partners will drive better performance,” the report said.