Introduction
One of the major benefits of technological advancement is that it helps companies and individuals become more productive. With the proliferation of cloud-based software, enterprises are using this technology to automate and reconfigure their operation and processes. The benefits of this approach are now available in freight and carrier management across all sized companies from the smallest to the largest enterprises.
Utilising an independent, multicarrier freight management system like our cloud-based platform 2Ship offers shippers the opportunity to capture and analyse their freight data and carriers’ performance more effectively than ever before. It’s now up to companies to take this opportunity and use it to continually improve.
Thankfully we can say that handwriting consignment notes has all but disappeared and consigned to the last century as a common practice. There are now substantial fees associated with raising manual consignment notes and so this practice should be avoided in just about every circumstance.
Freight Software Options
The options available to companies today are:
- Transport Carrier Software technology – typically a web portal:
- Free of charge.
- Semi-automated system that provides cost efficiencies.
- Limited to the one freight service provider and built around their needs, usually for outsourcing their accounting to your warehouse staff.
- Use of several Transport Carrier Software systems simultaneously:
- Free of charge.
- Provides the ability to manually select between carriers (either warehouse staff choice or edict from executive team).
- Limited to the constraints of training staff on several systems, setting up multiple printers, possibly different label types.
- An independent, multicarrier Freight Management System like 2Ship:
- A fee involved.
- Provides Automation.
- Price estimates freight and compares carriers for least cost carrier (or fastest delivery, depending on your priorities).
- Frees you up to make choices on adding carriers at will without repercussions of changing software systems.
- Provides you with all the freight data for your own analysis and allows for the integration of WMS / ERP systems for further automation.
Multiple Carriers
Some distributors appoint one carrier for their outbound freight requirements, but most look to have several carriers provide this service. Having several carriers can be a way of mitigating transport risk and lowering your outbound freight costs.
Having multiple carriers allows you to reduce the risks of exposure to one provider in case of a dispute, major service failure or risk of supplier financial collapse. Recently we have seen several carriers financially fail leaving their customers high and dry. By employing a multiple carrier strategy, distributors can use multiple services to satisfy their customers’ requirement for more expensive time critical deliveries, whilst also taking advantage of other carriers that use slower, but far lower cost general freight services for bulk goods.
This strategy also allows distributors to take advantage of niche carriers that often concentrate upon geographical specialisation. That is, use different carriers for different regions, freight types or service requirements. Some distributors will also use two directly competitive carriers thereby maximising competitive tension and cherry-picking transport lanes based upon the price.
Our experience when deploying the 2Ship platform connected via API to various carriers see clients typically save 10- 20% of the annual freight spend by using this strategy alone.
Carrier Provided Freight Systems
Most distributors use web-based dispatch systems, because they are provided by their carrier on a complimentary basis. For the reasons explained in the previous section, many distributors of domestic cargo find that it is more cost effective to use the services of several carriers.
This means that most companies end up with several software systems to dispatch their outbound freight. While this outcome may appear to be a low investment solution it is seldom the most cost-effective approach.
A prime disadvantage of this approach is that staff need to be trained on multiple systems, and if you introduce a new carrier then the staff need to be trained again or end up making costly errors.
When you have several systems, it is more time-consuming to go between the systems to choose the least cost, best service carrier for each shipment and to follow up customer queries on lost freight shipments. In fact, it’s often so time-consuming in today’s fast paced world that operators just elect not to make any comparisons and end up sending the shipment with the carrier they think is the most convenient and not the one they know is the best price or fastest.
A centralised system with live rates will save a lot of time and money when you can select the least cost carrier from your suite of carriers in a matter of seconds for every shipment.
Some companies avoid this cost and inconvenience of training and swapping between systems by limiting themselves to one carrier, which is a subpar outcome as discussed in the previous section.
Integration Limitations
Shippers using several separate transport carrier systems also often limit themselves to standalone arrangements where consignments are created by manually typing the data into several carrier dispatcher systems. Integrating with several carrier systems simultaneously is a costly investment that locks you in with the carrier(s), and for this reason is usually dismissed as an option, which means the distributor is limited to a manual process.
Using an independent multicarrier freight management system like 2Ship, which has a full suite of API with developer access, allows shippers to automate the importing their orders directly out of their WMS or ERP systems straight into the dispatcher, thereby eliminating double entry of data and human data error. One investment in integration that now allows you to switch and utilise multiple carriers easily and quickly. If a shipper changes carriers, it can typically take just 30 minutes to be up and running with the new API connected carrier without retraining and without getting IT staff of at least two companies to re-do the integration of the systems.
Sophisticated API based tasks such as:
- Hold for later shipment.
- Partial shipment.
- Live Rates.
- Order Aggregation.
- Multi Leg shipments and many more.
- Real time web hook tracking.
- Scan to ship.
These sophisticated integration tools can fully automate your shipping process with multiple carriers thereby drastically increasing your shipping throughput, significantly reducing costs and costly errors.
In-House Systems
Some companies choose to go it alone and use their internal IT resources to develop a dispatch management system. The advantage of this approach for them is that they retain full control of the project and can deliver the level of outcomes that they want. In theory that may be the case, but it doesn’t normally work out that way.
While many companies do have the resources and ability to achieve this goal, often they can end up limiting their systems to just the most basic functions of a dispatcher. That is, enough to create and send data to their carrier, but they don’t always go to the next step of developing management reports and tools to drive down their transport costs substantially.
Due to the expense associated with setting up a dispatch system to comply with the many and varied requirements of different carriers, most companies that develop their own systems cater only to their current carrier(s). For the reasons discussed earlier this is a mistake and it often means that companies simply stay with their existing carriers, never moving and testing new suppliers.
Given the recent proliferation of low cost cloud-based software portals it’s almost impossible for a shipper to economically develop an in house system that will cater for a range of various carriers (other than incumbent carriers) and as a result companies may miss out on opportunities for change and variability because it’s just too hard, or not timely enough to change their systems. It’s easier just to stay with what they have, which is often not a best practice approach to freight management.
Freight Management Software
A multicarrier dispatch system becomes a Freight Management Software (FMS) system when it can create comprehensive management reports detailing how and where a company spends its money on transport. Again, with real time API connection back to your ERP or reporting tools, a shipper can either use inbuilt dashboards and reporting tools, or elect to push their shipping data back to their ERP database so they can create custom reports such as:
- How much you spend on freight as a percentage of your sales;
- by carrier, cost centre, state, product, group etc.
- How much you can save by adding or changing carriers in a ‘what if’ analysis,
- and ensure that you always use the most cost-effective carrier for a given level of delivery service, for every shipment.
Some of the most advanced FMS systems can also:
- Prepare reports showing the ‘delivery on time’ rate by carrier or send alerts for the overdue deliveries.
- Reconcile your carrier invoices and even allow companies to reverse bill, based upon POD status (carrier dependent).
A sophisticated freight management system should be an integral part of your customer profitability modelling. This modelling allows you to make informed and therefore better strategic and tactical decisions about how you service your customers.
Summary
While there are alternatives to an independent multicarrier freight management system that may require lower levels of initial investment, these solutions may end up costing you more than an independent, multicarrier solution. An integrated independent multicarrier freight management system will promote proactive and comprehensive management of your carriers, as well as your transport expenditure.
If you would like an online demonstration of our independent, multicarrier freight management system please contact us and we will be delighted to arrange that for you.