Biggest Carrier Management Hurdle? Achieving a Balanced Carrier Mix
Implementing some standard best practices with regard to achieving a balanced carrier mix enables you to prevent losses and increase efficiency. All while better streamlining your shipping operations and fostering higher levels of visibility and communication between all parties.
Smart use of data and enhanced communication are at the heart of these best practices. They are the tools that will allow you to find just the right balance in your carrier mix. In turn, this leads to faster response times, a greater ability to collaborate, and more accurately plan your shipments.
The agility that a balanced carrier mix provides ultimately allows your business to continue thriving and serving clients and customers. This resilience and agility prove beneficial even in times of industry disruption.
Want to Achieve a Balanced Carrier Mix? Examine Your Current Stats First
Know Your Strengths
One carrier may perform particularly well in dense urban areas, another may have the best track record of delivery within a tight window, and yet others may excel at inventory management. By playing to the strengths of your carriers, you will build a stronger, more transparent relationship, and empower them with the tools that are most beneficial to them specifically.
When you know the strengths and weaknesses of the carriers you work with, you are better equipped to cater to their specific needs. The ability to do so only serves to benefit both you and your carriers.
Use Scorecards and Track KPIs
Your carrier’s performance directly impacts your customer experience and satisfaction. They are the final step in the delivery process. Keep track of late deliveries, missing or late paperwork and payments, and other performance metrics that are declining. Scorecards allow you to compare performance between carriers, root out problems early, and know when it’s time to drop consistently underperforming carriers.
Determining a set of firm KPIs can go a long way in finally getting your mix of carriers optimized and well-balanced.
Meet with your carriers regularly so that you can give recognition to their strengths, address any performance issues you notice and discuss upcoming needs.
This also gives your carriers a chance to tell you of any issues affecting them or their loads, voice concerns, and ask questions. Your carriers are on the road moving goods from point A to point B every day. They have first-hand experience with the physical route shipments travel. Because of this they generally have a handful of decent insights to share. Their knowledge on the ground is crucial to quickly improving efficiency and staying competitive. Strong communication also fosters relationships built on trust and transparency with your third-party operators.
While in the past, carriers relied on often slow and opaque paper-based systems, these are being replaced quickly with digital software. Today’s carrier management software allows carriers to better plan around disruptions in supply chains, unexpected price fluctuations, economic downturns, and other socio-economic issues.
The industry learned a few things from the disruptions caused by the Covid-19 pandemic. Most notably, the need to implement digital systems and best practices in carrier management is more apparent than ever.
Implementing an effective logistics software platform will increase communication between your carriers, wholesalers, and retailers. By providing all parties with up-to-date transparent information, everyone involved can act as one unit, reducing friction and unexpected surprises.
Know where and when you have extra capacity at all times.
This will allow for greater flexibility and quick responses to inventory or sourcing issues, allow you to dispatch more effectively and respond quickly to unexpected events. You can also use this real-time information to snap up deliveries through load boards.
Load boards (or freight boards) are marketplaces found online that allow shippers, brokers, and owner-operators to post freight loads that need to be picked up. By knowing where and when you have extra capacity, you can easily jump on these opportunities.
Snowstorms can suddenly put your delivery schedules on hold. Icy roads and floods can put your drivers in danger, likewise affecting delivery time in the process. Wars and sanctions affect the price and availability of different types of fuel, driving up fuel surcharges.
Set up alerts for natural disasters, road closures, and any other issues affecting your delivery areas.
Make sure your operators are knowledgeable about all current safety requirements.
The average fuel load of 7,000 gallons could lead to major disasters if safety measures are not followed. This is why hauling fuel comes with significant legal considerations. Carriers need to know and practice proper filling and delivery procedures. Most importantly, they need to be aware of the dangers inherent to their job.
Electronic Logging Devices (ELD) are a great way to monitor drivers and fleets to ensure they are complying with safety standards. These can also increase their efficiency by simplifying the workflow. You may also want to implement dashcams, artificial intelligence systems, and infrared. These systems will give drivers extra data they need to avoid hazards on the road, encourage safe driving, and provide documented evidence in case there is an accident.
What To Aim For When Trying to Achieve a More Balanced Carrier Mix
Now we have a good feel for what you may be lacking as well as where your carrier mix already excels. Next, we can begin looking at what you should be aiming to achieve through a better balancing of your carrier mix.
Many shippers have a nucleus of carriers that transport most of their volume, although this strategy bears an inherent risk. They prefer to manage fewer carriers to build closer, more long-term relationships.
Long-term partnerships benefit both shippers and carriers because they can align their logistic network patterns. This is a valuable element to have between partners as it provides true E2E visibility.
Keep in mind that no matter how well-aligned you and your partners are, a change in either operation can result in a decline in that alignment. Building rapport can be tough. Monitoring and maintaining those relationships, on the other hand, is a bit trickier.
Partnering with a 3PL like Redwood is highly recommended. Having a team to employ services to help automate or otherwise streamline your professional rapport-building efforts can allow you the time to focus on other more crucial tasks. Reach out to the team at Redwood and let us show you how our services can help you better connect and align with your partners.
Awarding freight to a low-cost carrier network is attractive for obvious reasons. But network efficiencies can be overlooked when low cost is prioritized in carrier selection.
New truckload freight capacity comes and goes, and buying primarily on price can lead to poor service. Be wary of price scales when making a final decision. Price should definitely factor into the decision but it should not be the end all, be all of the discussion.
Most shippers have experienced a situation in which their volume suddenly increases on a lane and find that their existing full truckload carriers have insufficient capacity to meet the higher demand. Shippers of nondurable goods have run into this a lot during the pandemic.
A solid routing guide requires depth to help overcome these situations. No matter how good your experience with a carrier, they may not have as much capacity as you need, or at least, have it where you need it. This is usually the case if they’ve contracted with another shipper at a higher profit margin.
According to some volume shippers, national carriers are the only ones who can handle their complete truckload freight requirements. It’s a common misconception based on comparing their full-network maps with those of national carriers.
National carriers have a wider reach but might not fit your network needs. By drilling down to a regional level, you’ll find more optimization opportunities.
Regional carriers can be a better fit. This is particularly those available in a few key lanes where national carriers are willing to go. Note that this is often only at added cost. They can effectively manage loads without triggering add-on costs for deadheading or non-compliance.
Leverage a CMS to Help You Realize a Balanced Carrier Mix
The four strategies for a more balanced carrier mix outlined in this blog post are all excellent alternatives that work individually for some shippers. However, in various combinations, they offer a lot more strength than any of them can achieve as a stand-alone strategy.
To effectively manage your carrier mix, you’ll want to invest in a Carrier Management Software solution (CMS). This software can help assign, manage, and review the KPIs and benchmarks of carriers you utilize. CMS systems can be optimized for specific industries, businesses, and carrier types.
Technology such as ELDs, dashcams, logistics software, and news alerts gives you the ability to respond quickly, support carriers, and improve their performance. Using scorecards to track performance or customer service issues and know the strengths of different carriers gives you the tools you need to be transparent with your carriers. It also allows you to play to their strengths and work on their weaknesses. And don’t forget to keep the lines of communication open, let your carriers update you with the issues on the ground so that you can sharpen your birds-eye view. At the end of the day, your relationship with your carriers is crucial. Engaging in best practices and utilizing the latest technology will strengthen that relationship and lead to greater success for all.
Work with Redwood
The best place to turn for CMS customization and implementation is a 3PL service like Redwood Logistics. We have years of experience creating customized CMS for companies involved in the supply chain. Our technology and real-world expertise give Redwood clients a competitive advantage in monitoring the performance of the carriers who represent their brands.