Volatility became synonymous with supply chain in 2020 and that trend has continued throughout 2021. Consistent disruptions are forcing shippers to rethink the way they manage their networks. Supply chain visibility is critical when making calculated decisions that help support the health of your business. Advancements in technology can help fill the gaps exposed by the pandemic and add transparency to the 81 percent of shippers that, reported in a study conducted by MIT Sloan, lacked full visibility into their transportation networks. While new supply chain technology is likely to emerge as a result of the pandemic, there are a number of existing tools organizations can leverage to navigate current and future uncertainty.
Transportation bids have increased in complexity due to extreme market volatility and has made it challenging for carriers and brokers to predict future rates. Shippers that facilitated domestic truckload RFPs at the beginning of the pandemic procured favorable pricing that many providers were unable or unwilling to honor when the U.S. economy began to reopen due to a dramatic spike in demand. Supply chains frequently attempt to take advantage of soft transportation markets and experience a high rate of tender rejection if demand returns during the same bid cycle. This lack of carrier compliance can force a shipper to tender a larger percentage of their freight to spot carriers that command a 35%+ premium compared to contract rates in 2020 and throughout the first half of 2021.
Procurement software can simplify your bid process and allow you to go to market more frequently when disruptions change transportation dynamics. Jaggaer and Transporeon are two players in the digital procurement space that can help streamline your bid processes and offer your carriers and brokers a broader view of your shipment history. They offer technology that automates the modeling process across all modes that most shippers still manage through spreadsheets. These platforms give shippers the capacity to maximize market transparency and focus their efforts on specific lanes and regions that may have the highest impact on rate negotiations. Providing carriers with lane-level forecasts creates better route guide adherence that expands savings and reduces the operational effort associated with managing the spot market. It is more important than ever to become a shipper of choice, and offering a structured, clear RFP simplifies your carrier partners’ analysis processes and creates a favorable first impression. Once carriers submit pricing, these applications make it easy to simulate countless award scenarios that affect cost outcomes. Storing the results of all previous RFPs is an added benefit. Leveraging historical data to make future route guide decisions is key to the continued success of a transportation network. These platforms are easy to implement and can help a shipper make data-driven procurement decisions and save countless resource hours in the process.
Market disruptions can force us to react and implement inefficient processes that can further complicate a supply chain. While these “Band-Aids” might provide immediate relief, oftentimes they remain in place for years creating a web that can take a tremendous amount of time and resources to untangle. A supply chain digital twin is an effective solution that can help proactively identify continuous improvement initiatives in real-time. A digital twin is a virtual copy of your business designed to automate analytical work in one or multiple areas of your business to help you make optimal decisions. For example, imagine a scenario where a supply chain has challenges maintaining the right amount of inventory at your company’s regional distribution centers. This issue forces the network to fill purchase orders from other DC’s or even multiple locations across the country that increase transit times and transportation costs. Digital twin technology can use custom algorithms and sort through years of sales data while including current business and market trends to predict optimal site inventory placement at the SKU level. Organizations can connect this tool to multiple supply chain systems and replicate this concept in any area of your network. This machine learning technology can be a powerful tool that saves analytical resource hours, eliminates human error, and makes calculated decisions in the most critical areas of your supply chain.
To implement digital twin technology, organizations can partner with a transportation management company that offers business process outsource solutions or select a software provider. The right transportation management provider will act as both an operator and a consultant, leveraging their expertise and experience deploying digital twins with other customers. Purchasing a software license to build your own digital twin through the use of SaaS providers like SAP and Llamasoft can also be an effective way to automate continuous improvement.
These technology platforms can help navigate challenging supply chain markets and set networks up for long-term success. It is becoming table stakes in the U.S. supply chain to facilitate the right engagement to manage a rapidly changing marketplace. At the end of the day, these technology platforms are only effective if their full capabilities are leveraged to take action against their results. Organizations can enlist the help of transportation management experts, like those on NFI’s team, to coordinate and implement solutions that give full visibility to their transportation networks.
Jeff Kanterman, RVP Transportation Management
Joining NFI in 2014, Jeff Kanterman oversees NFI’s transportation management division. Jeff and his team combine people, processes, and technology to help businesses enhance their supply chain networks.