Guest Blog by Dempsey Olsen, Manager, Transportation Consulting and Britain Pavlic, Director, Transportation at enVista
In the complex world of logistics, a strong and scalable transportation sourcing strategy is a cornerstone of a well-developed and resilient supply chain practice. Strategically navigating sourcing events requires a meticulous selection process, during which businesses evaluate and collaborate with carriers to procure the most efficient and cost-effective transportation services for their goods. For the selection process, your business needs to have any requirements (like capacity, specialized services or comprehensive route management) precisely defined in order to effectively solicit competitive bids from carriers.
Identifying Your Sourcing Strategy Gaps
By employing a strategic approach to transportation sourcing events, you can take control of your business’ supply chain by defining relationships with your carriers that align with your logistic needs and company mission. Successfully implementing a strategic sourcing approach requires you to be able to holistically review your transportation spend, practices and challenges to better understand how to best engage with transportation providers in order to unlock a best-in-class transportation operation.
Here are some key questions that can help you identify if your company has a solid and strategic approach to transportation sourcing:
- Do you have trouble keeping your transportation costs down?
- Is it hard to forecast your transportation spend because of rate increases or contract renewals?
- Are you missing systemic control over your carrier selection?
- Do you have different accessorial, fuel or freight all kinds (FAK) schedules for each of your carriers?
- Are your shippers using their favorite carriers instead of the ones that best suit your organization’s needs?
- Do you have trouble keeping track of carrier exceptions for your claims or auditing processes?
Creating a Data-Driven Sourcing Strategy
If the answer to any of the above questions is ‘yes’, it may be a sign that your organization hasn’t employed a strategic approach to transportation sourcing in the past and could be suffering from an unoptimized carrier network or a lack of standardization across your carrier base.
It can be difficult to identify what’s holding your business back from benefiting from a strong sourcing strategy, especially if your processes are bogged down by exceptions or an underutilized transportation management system (TMS). For leaders aiming to optimize their transportation sourcing, a data-driven approach coupled with accountability measures is essential.
Here’s a breakdown of focal points for creating an optimized strategy:
- Carrier Mix Optimization: Strive for a balanced mix of regional and national carriers tailored to service area and lanes.
- Volume-Driven Carrier Selection: Identify carriers based on volume needs, considering service areas and lanes.
- Asset-Based vs. Brokers: Determine the optimal balance between asset-based carriers and brokers for different scenarios.
- Leveraging Spot-Market Opportunities: Explore the potential of spot-market opportunities alongside contracted rates to maximize value.
- Implementing Changes: Streamline the process of implementing changes within the carrier network for enhanced efficiency.
- Key Performance Indicators (KPIs): Define and monitor core carrier KPIs to gauge performance effectively.
- Assessing Performance-Motivated Carrier Shifts: Evaluate the impacts and timing of shifting primary carriers based on performance metrics.
- Optimizing Route Guides: Fine-tune route guides to accommodate carrier capacity thresholds and ensure load balancing across the transportation network.
- Managing Carrier Pricing: Track and audit carrier pricing against contract commitments to ensure compliance.
- Setting Pricing Targets: Provide specific pricing targets to carriers to increase awarded volume.
- Exception Management: Develop protocols for managing exceptions to standard pricing schedules effectively.
enVista Can Help
Navigating the complexities of transportation sourcing can be simplified with the assistance of industry experts. At enVista, we specialize in leveraging our transportation expertise to design and execute best-in-class sourcing methodologies. Our tailored approach focuses on identifying current gaps, optimizing strategies, and transferring knowledge at every step.
Beyond cost savings of 5%-10%, our solutions empower organizations with resilient, scalable transportation networks capable of adapting to market dynamics and future growth. By partnering with experienced professionals like enVista, high-level transportation leaders can steer their organizations towards enhanced efficiency, scalability, and resilience in the competitive landscape of logistics. Fill out the survey here to qualify for a free 30-minute consultation with one of our transportation experts.
By incorporating these insights and partnering with experienced professionals like enVista, high-level transportation leaders can steer their organizations towards enhanced efficiency, scalability, and resilience in the competitive landscape of logistics. Contact us today to embark on the journey towards an optimized transportation sourcing strategy tailored to your organization’s needs.
