Judy Smith, the founder of crisis management firm Smith & Company, has famously said that “there’s always an opportunity with [a] crisis. Just as it forces an individual to look inside himself, it forces a company to reexamine its policies and practices.”
In January, no one thought the U.S. was in crisis mode, but the COVID-19 pandemic changed all that. For companies in the logistics business, there is much that can be learned from Smith, who has guided companies, presidents and countries through critical moments in their histories.
The past few months have led to an upheaval in the supply chain. As product demand shifted to essential goods and the emergency restocking of store shelves, inefficiencies were quick to appear. A single-day delay in moving goods doesn’t move the needle in the boardroom during normal times, but that delay is unacceptable during an emergency situation.
These inefficiencies showed themselves in part because many shippers operate with outdated or inefficient data models. This comes from running the wrong transportation management system (TMS), or no TMS at all, or working with the wrong partners. The first half of 2020 exposed all these warts.
According to consultancy Janeiro Digital, 50% of respondents to a 2018 supply chain survey said their company was not implementing any new technologies, and 84.7% ranked their company’s technology as average or lagging those of competitors.
The Council of Supply Chain Management Professionals said transportation costs rose 10.4% in 2018 – a significant increase and one that has been muted among proactive companies using the latest technology and collaborating with the right partners.
“The logistics industry is at a new crossroads,” Michael Zimmerman, a partner with A.T. Kearney and co-author of the report “Cresting the Hill,” said when it was released in June 2019. The report also stated that business logistics spending in 2018 was 8% of total U.S. Gross Domestic Product, up from 7.5% in both 2017 and 2016.
Clearly, trends would indicate that shippers hoping for reduced transportation costs are out of luck, which means they need to take control of their spend.
One of the most effective ways to do that is to evaluate their current technology. Companies may be ramping up operations, bringing employees back onboard, or in some cases, trying to restore services with fewer employees. How they do that will determine their profitability in the years to come.
As Smith’s quote implies, with every crisis comes opportunity.
A company like nVision Global and its Impact TMS can be a perfect technology during these times. Paired with additional tools such as freight auditing and payment, business analytics, procurement tools, and benchmarking, a robust technological approach can assist a company in optimizing its supply chain and reducing costs through fewer staff, increased productivity and lower transportation spend.
The right technological solution drives down costs and adds a layer of redundancy to ensure money being spent is done so wisely.
One area where spending can be reduced is through lower rates. Many companies, nVision Global said, maybe operating under old rate contracts. Smaller shippers may also suffer from a lack of scale that prevents them from securing the best rates. nVision’s rate negotiation service can help solve both of these problems.
It’s about scale. nVision Global has tariff rate agreements with thousands of less-than-truckload and truckload providers, and by negotiating on a shipper’s behalf, can often secure a lower rate. nVision also has access to thousands of rate-related data points that allow it to benchmark one shipper’s rates against industry averages, highlighting wasted transportation spend.
Procurement tools add another avenue to potential savings, and with technology that collects and easily parses data, shippers are able to quickly set criteria that ensure freight is routed to the right carriers at the best price.
If crises are opportunities in disguise, the company that takes the time now to properly assess its current technology and look for solutions that open doors to more efficiency, productivity and savings, the opportunity to emerge a stronger, more profitable company is waiting.
Originally posted at Freight Waves