February 24, 2017 | Industry Insights

Transportation Management Key in Enhancing Supply Chain Visibility, Reducing Costs

Share This:
Featured Image

Freight transportation costs in the United States amount to about 6% of the GDP, according to the Department of Transportation, contributing significantly to the cost of the supply chain for companies. When companies look to manage and reduce their overall supply chain costs, the appropriate use of transportation is key in doing so.

Transportation management enables a firm’s transportation strategy to support its competitive strategy and its ability to deliver a level of responsiveness to customers. Without proper transportation management, companies lose out on savings and opportunities. For instance, when freight costs are high, minor oversights can result in unnecessary expenses that cut into a firm’s overall profit margins. Product write-offs can occur when sales channels are oversupplied, while undersupplied sales channels can have negative results in the form of missed sale opportunities. Whether it is a large enterprise or a small business where margins are rather low, transportation costs are a crucial element to a company’s profitability.

In order to properly manage transportation costs, you need the ability to have real transportation supply chain visibility. This requires true system integration operating between a warehouse management system, management of the procurement, storage, and the packing and delivery process. This allows for better communication between all of the parties involved and provides clients with the ability to check on whether there will be time delays, added expenses, and even backlogs. Any of the these events can throw off production schedules, even creating idle labor or lost sales. So, as the costs add up, you can see the importance of focusing on understanding transportation’s role in the supply chain.

It’s also important to see the supply chain as a living thing, constantly evolving and necessitating flexibility to respond to these changes. For example, some suppliers like to challenge incumbents to offer better pricing or services, raw materials may fluctuate in price, or foreign exchange rates could alter. Any of these changes can affect the transportation supply chain as well. This means the supply chain is not static, and if the supply chain is not static then the distribution requirements will change. Transportation systems must change in response and it’s up to the shipper putting in place systems either in-house or through a third-party logistics provider (3PL) to provide that expertise.

Working with a 3PL in fact can help a company without in-house expertise to rein in transportation costs. A 3PL can determine which mode of transportation and which carrier is best for each particular shipment. 3PLs have a strong handle on the marketplace, know how to best optimize a customer’s freight network by laying it out in such a way that the flow of freight transportation is more efficient and timely, can leverage multiple carriers, and have robust tracking capabilities that provide clients with secure access, total visibility, and the ability to track cargo and submit queries.

Businesses of all sizes across all industries should improve their transportation management as part of their overall supply chain as a way of reducing the occurrence of supply chain errors and lowering their total costs.

 

 

Roanoke Trade provides insurance and risk management solutions to the trade and transportation industry. For more information about our products and services, contact one of our Roanoke Trade professionals at 1-800- ROANOKE (800-762- 6653).

Source: Supply Chain Dive

Share This:

Related


How to Protect Your Company from Nuclear Bodily Injury Verdicts

The liability landscape for the trade and transportation industry is changing. Carrier accidents on the road resulting in bodily injury and property damage (BIPD) claims pose a real financial threat to brokers, forwarders, and other transportation intermediaries. Recently, the number of large trucks involved in fatal crashes and the resulting jury awards have skyrocketed. Inconsistent application of the law has put the burden of these “nuclear verdicts” on not just the carriers but also the broker-forwarders responsible for hiring the carriers. This volatile litigation landscape and the rise in “nuclear verdicts” has specifically led to two related issues for transportation […]

Industry Insights

Is your Business Exposed to the Risks of Employee Distracted Driving?

The National Safety Council(NSC) recognizes April as Distracted Driving Awareness Month. They estimate that 4,000 deaths and 276,000 injuries occur yearly because of distracted driving crashes. Additionally, distracted driving is the cause of 10% of all fatal crashes. Many of these accidents and fatalities are attributed to drivers engaging in risky behavior such as cell phone use, eating/drinking, reaching for an object, talking to a passenger or reading GPS. Not wearing seatbelts, speeding and use of alcohol makes these accidents much worse. Additionally, the stressors of the pandemic, returning to work, and other social factors have increased the cognitive distraction […]

Commercial Business Insurance, Industry Insights

2024 NCBFAA Scholarship & Application Announcement

Roanoke Insurance Group is delighted to once again sponsor  a $5,000 scholarship to students intending to join the trade industry. The National Customs Broker and Forwarder Association of America (NCBFAA) offers this $5,000 scholarship award yearly and will be presented to the winner at the NCBFAA annual conference in April 2024. The topic for this year’s scholarship will be “What are the key steps an organization should take to ensure that training, auditing, and engagement with a licensed customs broker and the sharing of industry information are effectively relayed to all employees, as well as properly documented to substantiate compliance […]

Events, Industry Insights

Roanoke is the leading provider of insurance and surety solutions for transportation and logistics providers. In fact, we are recognized as the most reliable source for U.S. customs bonds.

Contact

If you have any questions or need help, feel free to contact with our team.

800-762-6653

US CORPORATE HEADQUARTERS

1501 E. Woodfield Road

Suite 400W

Schaumburg, IL 60173


CANADA CORPORATE HEADQUARTERS

390 Bay Street

Munich Re Centre, 22nd Floor

Toronto, ON M5H 2Y2

Solutions that Go the Distance.

© 2024 Roanoke Insurance Group Inc.

Better Business Bureau logoCoverholder at Lloyd's logo