Transportation Best Practices
Best in class organizations exhibit a consistent set of behaviors and identify and implement improved processes in order to maximize the efficiency and effectiveness of their transportation operations. Organizations seeking continuous improvement monitor, measure and compare their performance against other organizations to improve their return on investment, generate greater savings, enhance their supply chain and improve sustainability. In the Office of Government-wide Policy, we encourage all who are engaged in transportation management to use best practices to improve operational performance. The following is a list of transportation best practices.
1. Gain Visibility
Best in class organizations gain visibility into their shipping needs and processes to identify and influence process gaps that cause variability in the supply chain. Relevant data and information is provided to Transportation Service Providers (TSP) to allow for advance planning based on shipping patterns. Good organizations analyze freight spend in order to improve their internal ability to source and negotiate freight rates.
2. Forecast Demand
The organizations that are best in class have the ability to forecast demand and to share the forecast with TSPs and leverage economies of scale by coordinating transportation procurements across agencies. Organizations should forecast demand for 5 years to be able to provide accurate forecasts, using the same discipline as the best commercial companies.
3. Differentiate Service Levels
The best in class organizations relentlessly focus on improving service across the entire supply chain to improve the customer experience. An organization should differentiate service levels to meet the needs and commitments of different customers. They select the most cost effective transportation methods based on the individual customers shipping criteria and segment the service level requirements by customer and type of shipment.
4. Invest in a Transportation Management System (TMS)
Best in class organizations use a TMS to determine the most effective mode and fully integrate and automate the procurement to pay lifecycle. They are also able to use a TMS to proactively monitor the shipments in transit. Fully mature organizations have systems that consolidate and automate routine transportation management tasks and are designed for joint process improvements/optimization with customers and suppliers. Organizations that use a TMS to realize increased ROI from cost reduction, efficiency improvements, empowering the organization with data and shared knowledge and optimize internal spend.
5. Consolidation Shipments
Best in class organizations use good data to unite disparate units and achieve an understanding of how to consolidate shipments in order to optimize shipping operations.They have subject matter expertise to be able to determine how to consolidate purchases and shipping where appropriate, pool parcels into zones and ship in bulk to generate savings through freight consolidations. Organizations that are using leading practices, wherever possible consolidate shipments to take advantage of savings realized by shipping in higher volumes and eliminate empty backhaul.
6. Develop Performance Metrics
Organizations should develop standard performance metrics used by best in class companies and collect performance data to enable fact-based decision making on how to improve service and lower costs. They relentlessly compare performance metrics with best in class and make improvements for closing any gaps based on analysis of the overall freight spend trend and freight rates. By using common metrics to benchmark with other organizations, best in class organizations create performance assessments and comparisons that incorporate industry and other best practices to improve supply chain performance.
7. Perform Audits
Best in class organizations automatically audit freight invoices against electronic rate tables. They audit 100% of invoices both pre and post payment to identify invoice errors, obtain an accurate shipment history and use the information to populate a database to improve the entire process.
8. Form Alliances
Best in class organizations treat TSPs and other organizations who participate in the supply chain as partners and openly share information with them. They strategically use their vendor relationships to manage transportation as part of an integrated whole. By doing so they can provide advance planning for TSPs, leverage assets to ensure all organizations are prepared to meet the organizations demand and provide service in the most efficient, cost effective manner. This type of open collaborative process also provides for continuous process improvement and can maximize benefits for all participants.