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TRANSPORTATION MANAGEMENT

03

Transportation N etw ork Optimization


in the Amazon Effect Era
Having transparency across all aspects of your logistics operation w ill
enable your company to succeed in a co m p etitive marketplace.
By Gary Allen

mance baselines and the accompanying network profile.


Second, you can leverage data analytics to quickly drive
business insights. You want to be sure youre spending more
time interpreting the data than on gathering and reporting it,
which can be achieved by purchasing a cost-effective tool that
can quickly turn Big Data into actionable information.
Equally essential is establishing a four-step approach as
the basis for managing and controlling network costs and
service performance:
Performance + Variance to Plan + Root Cause = Action.
You can utilize tools including bar graphs, such as Pareto
fficient transportation management with end-to-end charts, to focus on the areas driving the greatest impact to

E visibility is becoming more and more vital to a compa


nys supply chain and its overall success. As e-commerce
and omni-channel fulfillment service pressures continue
to mount, transportation managers are faced with a growing
number of challenges: shorter lead times, tighter delivery win
the issue.
Also, when developing your weekly/monthly perfor
mance bundle for management reviews, the information,
charts and dashboards that you gather should answer the
question: What should the takeaway be from this? All too
dows, driver shortages, the need to make more frequent and often, the audience is left to interpret the information with no
smaller shipments, rising freight costs, and globalization. direction from the subject matter experts.
These challenges have a significant impact on a compa Finally, get into the practice of reviewing. Consistently
nys operation and its bottom line. From increasing freight monitoring your network (weekly, monthly, etc.) will pre
rates to uncertainty in the transportation market, there are vent network performance issues from lingering too long and
numerous factors playing an influential role in driving the worsening before getting addressed.
market forces that could prevent supply chains from meeting
their customers rising demands. The Am azon and the Uber Effects
The reality is that in the majority of cases, there is room In addition to taking these steps when establishing your
for network optimization and cost savings. Private fleet transportation management strategy, its critical to be aware
shippers have the ability to achieve both through routing, of the different emerging trends within the industry and how
dock scheduling, driver management, backhauls and fleet theyre impacting your business. Trends like the Amazon
right-sizing. And the benefits are far-reaching: Effect, for example, can no longer go ignored if you want
Dynamic planning capability your company to experience long-term success. The Ama
Flexibility to manage variations in demand zon Effect goes hand in hand with the concept of the now
Increased network visibility regardless of mode economy, in which customers order items at the touch of a
Alleviated capacity changes and driver issues button and receive them at their doorsteps just hours later.
Business intelligence and analytics The phenomenon is evidenced by 2016 e-commerce growth,
Comparison of costs for fleets vs. for-hire carriers with Amazon accounting for 53% of online deliveries, ac
Strategic decision-making support. cording to Slice Intelligence.
You might be asking yourself what actionable things you The Amazon Effect has skyrocketed demands within the
can do to really streamline transportation management, trans supply chain and has set the standard for what consumers
form operations and navigate the aforementioned challenges. have come to expecteverything from competitive pricing
First, you can formulate effective baselines that can be com to free shipping and quick delivery time. This trend has been
pared to actual results. Being able to quantify progress can be the key driver behind the closing of some brick-and-mortar
made simple if you make it a priority to understand perfor store locations, including M acys, JCPenney and Sears.

28 W W W .M H LN EW S .C O M I JUNE 2017 I MATERIAL HANDLING & LOGISTICS


With a limited inventory of in-store wasnt one consistent process. Transit ers, gives a clear view of inventory and
merchandise, fewer retail stores and the times were reliable and tight, but the pro supply chain activity, and helps create
ability to find just about anything you cess was hampering deliveries, and it responsive supply chains.
could possibly need on Amazon, con was too labor intensive. With managers Many businesses partner with a 3PL
sumers are less inclined to get in their relying on handwritten spreadsheets, the with engineering, integration and oper
cars and head to the store for something. retailer partnered with a third-party lo ation teams in order to get a true visibil
And if youre thinking that youre im gistics provider (3PL), which installed ity program in place. A 3PL can help a
mune to the pressures because youre web-based software at each DC. Now, company execute the five vital steps in
not in the retail space, think again. This the software allows managers to dynam system implementation:
trend is disrupting supply chains serving ically control deliveries at each location, CaptureUse advanced technol
multiple industries, such as food and saving the company $2.8 million in op ogies to gain visibility across the
beverage, consumer packaged goods, erating and transportation costs the first supply chain.
automotive, technology, and healthcare. year and improving visibility. AnalyzeEvaluate where branded
A greater need for asset sharing has and private label products come
materialized as a result of the Amazon A Responsive Supply Chain from.
Effect, fueling whats known as the Uber New strategies and results have sup DesignSet up supply chain routes,
Effectyet another trend and supply ply chain managers embracing the same material flow and logistics networks to
chain disruptor. Asset sharing, which in technology customers are using for data accommodate varying requirements.
cludes warehouses, trucks and drivers, is mining, analysis and tracking. In another SenseUse advanced analytics, busi
emerging as an opportunity to help com approach, competitors are cooperating ness process and planning technologies.
panies meet the demands of the Amazon with each other to improve efficiency StructureDevelop structured
Effect by facilitating collaboration with and keep shelves stocked. These strate playbooks or scenarios to know how
peers and competitors to drive efficien gies enable customer demands to be met to comply with rules, regulations,
cies, improve service and manage costs. while lowering their cost to operate. exceptions and practices.
This practice, which centers on sharing Having transparency across all as Technology solutions are available that
space, translates into shared costs, which pects of your logistics operation is ulti work on both smart devices and desktops
will lower overall supply chain cost and mately what will enable your company and that can provide load location visibil
improve cash-to-cash cycles. to succeed in a competitive marketplace. ity, tracking and customized communica
These trends are pushing supply This is where technology comes into tions across all modes of transportation
chain managers to adjust their strategies play. By investing in new technology through a single source. MH&L
in order to keep loyal customers and re that gives you visibility into your sup
main in business. Approaches that once ply chain, you're ultimately enabling G ary Allen is vice president, supply
worked, no matter how recently imple a cycle of continuous improvement, in chain excellence with Ryder System
mented and regardless of the sector, can which youre able to track parts, com Inc. (w ww.ryder.com ). H e has more
be obsolete tomorrow. ponents and products from the manu than 25 years o f experience in sup
For example, up until a few years ago, facturer to the final destination, both ply chain management, logistics out
a large retailer was performing dock in transit or at rest. The ideal system sourcing and professional services.
scheduling for each of its 35 distribution captures data through new and flexible
centers separately. Too many employ technologies, makes useful data rapidly FOR RELATED CONTENT, GO TO:
ees were scheduling deliveries and there available to stakeholders and custom mhlnews.com/tech-supply-chain

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