The Best of Both Worlds – Flexible Freight Management
It’s been said that the art of management is that of balancing conflicting objectives. There’s a need for trade-offs, and historically that’s meant sacrificing one good for another. You can’t enjoy that awesome slice of cheesecake today AND stick to your diet. Pick one, you can’t have both.
Back in 1982, best-selling management guru Tom Peters and fellow consultant Robert Waterman authored an exceptionally popular book, “In Search of Excellence.” In it, the authors attempted to identify the formulas and practices that leading companies used to become great. While some of the ideas were very straightforward, one concept in particular was put forth that seemed essentially contradictory – “Simultaneous Loose-Tight properties.” Essentially, this was the ability to delegate decision-making to lower levels of the organization while maintaining overall control and direction.
In transportation management, this tradeoff is manifested in the conflict between centralized vs. de-centralized management.
On one hand, centralization of transportation management is pursued by companies who want better compliance and control of their transportation spend. Additionally, companies who pursue centralization desire to aggregate their buying power, develop domain expertise and maximize the productivity of their transportation team. All good and noble ideals, yes?
On the other hand, decentralized transportation management has its advocates as well. The first and foremost reason being related to “tribal knowledge” regarding the customers and market of a particular industry or geography. “Those (insert disparaging adjective related to intelligence, education, parentage, etc.) in (HQ location) don’t understand our business” is the common refrain. Other arguments for decentralization refer to a lack of responsiveness. “Those guys are in the (other) time zone, and they never answer their phone or respond to emails,” is repeated often and enthusiastically.
Interestingly, organizational design can influence the support for decentralized operations. The desire for a “culture of accountability” for a particular plant, DC, business unit, often conflicts with the desire to centralize transportation management operations. “How can we hold an individual or team accountable for a given outcome if they have reduced or limited ability to make decisions?”
How an organization has grown will also have an impact on how centralized transportation management operations are. Organic growth, where a business expands existing business into new markets and new geographies, is much more amenable to centralization, particularly because the “tribal knowledge” resides at the headquarters. But so often these days, growth comes through mergers and acquisitions. The P&L may be centralized, but the day-to-day knowledge of how the business runs
remains at the acquired companies.
The push and pull between the desire to centralize transportation operations and the need to respond quickly and appropriately to business issues is something we see all of the time with our customers. In most cases, companies have reached an equilibrium point depending on all of the factors identified earlier, but because of conflicting objectives, companies become mired in the status quo and forward progress grinds to a halt.
Break the Status Quo through Flexible Freight Management
After seeing customer after customer wrestle with centralization / de-centralization conundrum, we’ve found a solution in Flexible Freight Management, which eliminates the false choice between benefits of centralization with the business imperatives that drive de-centralization.
What is Flexible Freight Management? It’s a customized, holistic approach to transportation management that leverages technology (both connectivity and automation), “next practices” and “tribal knowledge” of shipper personnel to eliminate the trade-offs between centralized and decentralized transportation management and instead, implement a solution that truly combines the best of both worlds.
How do you get there from here?
It starts with collecting and documenting the knowledge that your team members possess about how your business works, what your customers require, and what decisions need to be made. Without this knowledge, no amount of technology or organizational re-engineering will yield any improvement. The second key element is technology, specifically process automation and connectivity. Today’s SaaS-based technology is easier and more cost-effective to implement than ever before, and integration technologies such as Application Programming Interfaces (APIs) are far less time-consuming to implement than older technologies such as EDI. New technology platforms enable custom workflow development, which drastically shortens user learning curves, and also aids in compliance and speed. Finally, it’s about using the visibility and data now available to make better decisions, as well as leverage the full scope and scale of the business when procuring resources.
The Best of Both Worlds
With Flexible Freight Management, shippers are able stay close to their customers and delegate decision-making authority for day-to-day operations while gaining the control needed while maintaining and growing expertise. It’s truly the best of both worlds.