Now that we're nearing the end of summer and kids are getting back in school, I wanted to share an important and timely lesson for managing logistics. Virtually every C-Level executive tells me that their supply chains are critically important to the success of their business, yet fewer than 10% of the executives we have surveyed rate their supply chains as being good, very good or excellent.
Thus it is no surprise that these executives who don’t think too much of their company’s supply chain capabilities, are skeptical when they hear me say that most (a.k.a. more than 80%) of the companies in North America can reduce their freight and supply chain costs by as much as 10% - 15%. Their skepticism, which dissipates when they hear how they could achieve a 10% - 15% reduction in their freight and supply chain costs by using different services and solutions, is often replaced with a resignation that shouts: “Those things might work for other companies, but it would never work at our company!”
Based on experience, we know that these “things” will work at their company if they are willing to change, follow the plan and invest in doing the things that need to be done to get the savings results that are on the table. We're going to highlight a few of the changes we recommend in a series that starts this week. This Two Minute Warning focuses on Step One in the process: Start with the basics.
First, look at your freight and supply chain opportunities strategically instead of tactically. The transactional approach operates with a focus on building savings by asking the carriers for the lowest rates. While this could be necessary or beneficial at times, it shouldn't be at the center because you can’t get additional savings when the rates are as low as they can possibly be. Our Transportation Spend Management eBook has been well received by shippers who are willing to think strategically and change practices and processes that will lower their costs and make them more efficient and more effective in serving their customers.
Shippers that think strategically look at how they can change the things they can control – things they choose to do internally with their sales, procurement and IT processes to lower their freight and supply chain costs. Strategic shippers manage from the inside out.
Second, shippers who want to lower their freight and supply chain costs by 10% - 15% know that there are some things that they need to have “packed” before embarking on their journey. They know they need to have:
- Accurate data to assess how the changes they make impact their company’s ability to serve customers and lower costs.
- Technology and tools to digitize their freight and supply chain processes and practices.
- Expertise and experience to guide them on the journey. Are there “best practices” and issues that need to be considered as decisions are being made that impact freight and supply chain processes?
At TranzAct we provide tools and technology for building and operating a supply chain, such as our freight audit and payment services, Freedom Logistics, or our Constellation TMS. These tools and technology provide accurate data and streamline processes. And our Supply Chain Edge consulting group has a wealth of experience and expertise to work with your team in delivering 10% - 15% savings that can boost your bottom line profitability.
If you'd like to learn more about what this looks like, I encourage you to get in touch. Just give me a call at 630-833-0890 Ext 190, send me an email, or schedule an informal conversation via Calendly.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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