Archives for June 2017

Are You Strategic about Data-Driven Logistics Strategy?

By Shannon Vaillancourt | 06/30/2017 | 6:57 AM

Logistics strategy has evolved over the past few years. Today, taking a strategic approach to logistics management has never been more important–or more attainable.

After the great recession, carriers took a serious look at costs and started to rationalize their pricing. This put a lot of pressure on shippers as the old strategy of yelling louder at their carrier was no longer effective to reduce costs. This created a big need in the market that has been filled through the advent of cloud computing, which allows large amounts of data to be collected and stored easily and inexpensively. The trend is now towards being data-driven with the data dictating the strategies. As a result, shippers essentially have gone from subjectively strategic, using strategies based on hunches, to objectively strategic with strategies driven by data.

Moving Strategies from Your Head to Your Loading Dock

Most companies have lots of logistics strategies in their heads but not many in place. What keeps them from implementing these strategies and incorporating them into operations? The most common barrier is fear. There is fear of implementing a strategy that may fail because they don’t quite have all the data needed to ensure that the strategy is correct. And then there is fear of a lack of IT resources. Often, strategies require IT support and involvement. In many companies, this support is as rare as a unicorn.

The first step to create an effective strategy is to base it on facts. In order to do this, you need clean standardized data that provides unbiased information which will allow you to become data-driven.  This lets you accurately diagnose the issues that you are experiencing with your logistics.

Look Before You Leap

Once you know the issues, you can develop strategies and simulate or model the potential strategies before you actually deploy the chosen strategy. One of the most important steps to creating effective strategy is testing it. Having a way to simulate your strategy using your clean standardized data allows you to find any unintended consequences of your strategy before you implement it. These unintended consequences most likely will prevent you from reaping the intended benefits of the strategy. For example, what if your strategy will only work if you added a day to the freight’s transit time and you know that you can’t do that? Better to see this before you implement the strategy than after.

Measure and Monitor for Success

Once the strategy is deployed, make sure you are measuring the proper values to provide the required operational transparency to ensure you are successful. Consultants or outside help can provide excellent insight when developing strategies. The challenge is making sure the consultant you bring in is truly objective. Ask yourself, are they talking us into a strategy? Or is the data influencing our decision? If it’s the data, then you are working with the correct consultant.

Governance is crucial. A lack of governance can actually cause a strategy to not work quite right. Often companies implement a strategy and don’t monitor it because they do not have a governance layer in their logistics solution. If you can’t measure and monitor the strategy in real time, it doesn’t take long for the profit leaks to remove any value that you hoped to gain with the strategy.

Objectively Strategic

The advent of cloud computing has opened new opportunities for shippers to be objective about their logistics strategy. With clean, standardized data, strategies can now be developed and tested prior to deployment to avoid unintended consequences. Your greatest logistics problems can now be solved with data-driven strategies.  

Do Your Logistics Problems Need a Consultant?

By Shannon Vaillancourt | 06/02/2017 | 7:38 AM

Every company has logistics problems. The most common problem that I hear companies want to solve is understanding how compliant they are with their own routing guide. This includes both outbound and inbound freight. The second most common problem is looking for ways to cut their freight cost.

Many companies will try to solve their logistics problems internally, but for a variety of reasons, they never quite get solved completely. Not surprisingly, the two most common problems that never quite get solved with internal resources, are the same as above.

If you are facing these problems within your company, it is time to find a consultant.

Stale, Incomplete Data Is a Problem in Problem Solving

What keeps shippers from solving these problems? Usually it’s the data. Many times, the shipper goes to their IT department to get the data they need to run an analysis to find out how compliant they are or to look for strategies to lower their spend. The data IT provides is typically stale and no longer relevant (months behind), or it has to be cleansed because a large portion of the data is not accurate, so it is removed. This always leaves the shipper with a partial view of their current reality which often mutes the extent of any opportunity to actually solve the problem.

If you find yourself working with data that is stale or incomplete, you can neither accurately diagnose or solve the problem. It’s time to find a consultant.

Consequences of Not Solving Problems

While there is a cost of bringing outside resources on board, the cost of not solving these problems or of solving the wrong problem can be significantly higher.

For example, a routing guide compliance problem could present itself as a carrier billing issue. Say a particular lane should have its freight hauled by carrier A, but instead, carrier B is used. When the freight invoice from carrier B is received, the shipper may have an exception in their payment process because they don’t have a rate for carrier B. Instead of solving the real problem—wrong carrier used to haul the freight—the shipper gets approval on the freight invoice to pay the carrier. This problem can cost a shipper an additional 5% to 10% in freight, which can equate to a few hundred thousand dollars, or even a few million dollars depending on the volume of freight moving down a particular lane.

Three Questions to Evaluate Logistics Software

This type of problem, and the inability to accurately diagnose or solve the real underlying problem, is typically caused by not having three things: 1) standardized data, 2) relevant data, and 3) insight. These are three things that a consultant should be able to provide.

Of course, a consultant is only as successful as the logistics software that is used. The most important questions to ask when evaluating a consultant’s software is how will their software provide these three things:

  1. Standardized data—how is the data going to be standardized and cleansed? The answer should be no data will be removed and any non-standard data will be fixed so as to ensure a complete picture.

  2. Relevant data—how close to real-time is the data going to be? The answer should be near real-time with data being presented within 24 hours. The sooner you see a problem, the easier it is to fix, and the greater the value.

  3. Insight—how actionable will the data be? The answer should be there will be alerts telling you in real-time when something is happening right now that needs attention, and analytics should tell you why it happened.

There is a fourth question that should be asked of the consultant. Are you going to talk the shipper out of doing anything? To this the answer should be, “No, the data will drive all the decisions.” There should be no need for a consultant to have to convince a shipper to do anything, because the data will reveal the solution. A consultant’s job is to help the shipper obtain standardized, relevant data and provide insight to interpret the data. As I wrote in my last blog, the consultant should be enhancing your ideas to take them from good to great, and the software should allow you to do this quickly and easily. This type of collaboration will allow you to improve outcomes and leverage your logistics as a competitive advantage.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Shannon Vaillancourt

Shannon Vaillancourt

Shannon Vaillancourt is president and founder of RateLinx. Launched in 2002, his data services and consulting firm provides a customized, end-to-end supply chain solution from order to payment. RateLinx's software suite integrates data from multiple streams in real time to create a data foundation that allows companies to have a complete and true picture of what is happening in their supply chains. Applying advanced analytics with the proprietary Logistics in 3D process, RateLinx helps businesses in a wide range of industries access intelligence from their integrated data. With increased visibility, they are solving even the most challenging supply chain problems while reducing overall costs.


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