Welcome back to our newest series, “TMS Talk,” where we are exploring the ins-and-outs of all things transportation management technology. In part 4 of this series, we’ll discuss how a TMS can help your company most effectively manage supply chain risk. Optimizing your transportation management is more than just saving a few dollars per load – it’s about making strategic, data-driven business decisions that allow you to reduce risk and drive meaningful change throughout your organization.
TMS + Risk Mitigation
Every organization has associated risk which can manifest in a myriad of different ways. And while there are varying degrees of risk within each department and job function, the greatest risk an organization faces is losing its customers.
In order to be successful, your company needs to meet customer demand – regardless of internal changes or shifting market conditions. The transportation landscape is constantly changing and can be impacted by a wide range of factors such as weather, new regulations, market fluctuations, capacity constraints, fuel prices and much more. That’s why it’s critical to establish and maintain a strong, flexible supply chain, and have a strategic plan in place that enables you to reduce the negative impact of potential disruptions that could impact your end customer.
To effectively mitigate risk and help ensure your company’s ability to meet customer demand at high service level, you need to plan long-term and implement proven industry best practices. For example, establishing programs around key supply chain processes, such as vendor compliance, can both improve your internal operations as well as give you greater control over your inventory levels and cash flow.
TMS + Advanced Planning
Additionally, advanced planning 12 to 18 months out and conducting “what if” scenarios is critical to ensuring your supply chain runs smoothly even when unplanned disruptions arise. For example: what happens if transportation capacity tightens, and the carriers you typically use shift capacity to lanes where shippers are willing to pay more – will you still be able to deliver product to your customers on time? And will you have to pay a high premium in order to do so?
The answers to these questions could have a big impact on your business and customer relations. This is especially true in today’s hyper-competitive ecommerce market were consumers want greater variety and expect two-day, or even same-day, shipping. Don’t fall into the trap of ignoring supply chain risk because you haven’t faced major disruptions in the past. The market may be favorable now, but it’s a fact that capacity will at some point tighten and rates will go up. When this happens, the partnerships, processes and technology you have in place will greatly impact your ability to serve your customers – and do so cost-effectively.
If you retroactively react to any major market changes before you try to evaluate and optimize your transportation network or strengthen relationships with carriers and brokers, you put your business at risk.
Does your organization have the right resources and processes in place to mitigate risk?