Managing carrier performance and ensuring accountability is one of the most critical challenges facing shippers today.
Technology has transformed how logistics operations track, evaluate, and optimize carrier relationships—and shippers who fail to leverage these tools risk losing customers to competitors.
Not too long ago, logistics operations majorly relied on paper files, printed reports, and carbon copies to review the performance and billing of carriers.
Thankfully, technology has revolutionized the way you maintain these files, collect data, and review the performance of those who represent your company.
One of the most essential audits that you can perform is a performance review of your carriers.
Whether you use parcel shipments, LTL, multimodal, intermodal, or FTL, every carrier makes an impact on your ability to serve customers. If they do not maintain a level of service quality that matches your expectations or provides you financial return on investment, it's essential to make changes before your customers begin working with one of your competitors.
At its core, this is the power that carrier management systems provide shippers today.
In this article, we will explain what carrier management systems are, their uses, and why it is so vital to work with a proven transportation management partner to help anyone in the logistics arena create a CMS for their supply chain operations.
What is a Carrier Management System?
A carrier management software solution (CMS) is basically an extension of the modern transportation management system (TMS). Its primary mission is to assign, manage, and review the benchmarks and KPI of carriers that shippers often utilize.
Whether you operate in manufacturing, retail, or any other industry, you can customize dashboards and reporting features to match your specific business needs.
With a CMS, you can easily keep track of accessorial charges like fuel surcharges, contract negotiations, on-time deliveries, and various other critical data.
You can even gather instant data from customers or receivers of your shipments. This includes information about hidden freight damage, driver courtesy, professionalism, and other relevant customer service standards.
Your CMS functions as a secondary tool within your existing TMS. This allows you to use one, easy-to-access software solution for all your shipping needs. It can be linked with your company's existing transportation management software, allowing you to receive instant rate quotes from multiple carriers. With this information in hand, you can then review those carrier performances with the CMS.
This technology provides you with a competitive advantage by ensuring you pick the right carrier for the right job. No beating around the bush and no need for last-minute changes.
Today's modern CMS can review multiple key performance indicators (KPIs) for carriers, including:
- Carrier Performance – When you hire a carrier to deliver products to a customer, how do you know they're meeting your standards? Ensuring that the delivery arrives on time is the most important performance indicator. The CMS receives input from the customer and the carrier about on-road performance. It then compares the data to ensure consistency. If discrepancies are found, it can notify you through email or other customized communication preferences. This allows you to perform an accurate follow up with the customer.
- Shipping Delays – Most carriers utilize GPS tracking to allow you to review the status of your deliveries in real-time. The CMS can collect this data and review any shipping delays—whether it's related to traffic, the elements, or driver restrictions. A CMS only records the facts. However, if the information provided to you does not match the data from your CMS, this is a red flag, and it is a cause for concern.
- Freight Bill Auditing – One of the most crucial carrier performance indicators is that of accurate billing. Each carrier is assigned with specific, negotiated contracts including fuel surcharges, delivery rates, and other items. If the information noted on an invoice is not accurate in comparison, the carrier management software alerts you to this. This alert allows you to determine whether the mistake was indeed an error or an intentional change.
Final Thoughts
You can optimize your carrier management software solution for your specific business type, industry, and type of carrier. The best resource available for the customization and implementation of a carrier management system is a Modern 4PL approach like Redwood's.