Logistics costs make up a huge part of many trucking companies’ total operating expenses. These costs can often represent 10% or more of total overhead costs. Yet, few fleets can say for sure their shipping-related expenses are competitive and market-appropriate when compared to other trucking companies that operate in their industry or who utilize similar operation models.
Fleets have similar problems benchmarking other key logistics performance indicators such as delivery performance and overall lead-time. The inability to benchmark these factors represents a serious blind spot for many fleets. Still, progressive trucking companies are waking up to the value of shipping data. They have also put a renewed focus on the role their transportation partners and technology play in providing the right perspective necessary to improve their operations.
Trucking companies that analyze their data and apply what they learn to their freight management processes gain the tools needed to better handle supply chain disruptions. This effective process also allows them to make the proper decisions more confidently during a crisis. With technology, the possibilities for maximizing efficiency and increasing margins extend far beyond the shipping function. Still, many companies miss out on these opportunities because they aren’t using their data to its fullest potential.
Top Tips to Manage Your Logistics Data
First, you need to make sure you ensure competitive and current freight rates and tracking information reaches the people who need to see such data. Certainly, the current market turbulence will eventually stabilize, but in the meantime, it’s taken a big toll on fleet managers’ confidence nationwide. And it makes it difficult for them to stabilize their rates and ability to find reliable capacity.
Expectations for faster delivery times and increased supply chain transparency are also higher than ever. Customers know that technology is available to ensure trucking companies can provide the transparency required. Using technology allows shippers and their customers to have an accurate view of the market and capitalize on real-time freight data.
Still, it can be nearly impossible to formulate the best route and mode a delivery needs because there are so many variables that must be accounted for. These variables include rates, transit times, pick-up delivery windows, and special handling requirements. Businesses can leverage this data to optimize routes and reduce freight costs on a micro level with technology that factors in all the overlooked details.
Finally, make sure you accurately measure and improve your supply chain performance over time. You must continually evaluate performance to ensure you aren’t losing money. A great starting point for using data is to track the metrics that have the greatest impact on the success of your logistics operations.
These metrics include detention, lead times, tender rejections, on-time deliveries, freight bill accuracy, and OS&D issues. Once you’ve accurately narrowed down the data that matters specifically to your organization, then you can use that information to properly measure and improve your overall supply chain performance.
How Do You Obtain the Right Data?
The problem for most fleet managers lies in getting access to useful and relevant data. Without it, it will eb difficult to see exactly what is going on and/or needed at a fleetwide level. Fortunately, there are several data sources available to help fleet managers figure that out. Companies with access to comprehensive, accurate market insight can make better logistics decisions, both in the short- and long-term. The good news is part of this need can be satisfied with a few already available resources and reports. Consider the following sources:
Yet, it is important to not fully rely on third-party resources. While these are some of the top places to go when you’re searching for key freight market intelligence, they only give you a piece of what you need. You cannot make broader business decisions based simply on data points.
The big picture information from these sources, unfortunately, provides a general overlook of the marketplace that isn’t specific to your company’s industry. Your operation is not written out in a fact sheet and does not happen in a vacuum. For example, generalizing historical rate data to include a whole metro area is not precise enough because rates can vary even within a single zip code based on many factors.
For trucking companies who want to be truly data-driven, there are gaps between what these databases portray and what you are experiencing. Therefore, operational context is so important. Fleets that frequently look at these data sources will have a leg up on the competition, but if they are not looking at the data through the right lens, that leg up won’t last long.
The Breakdowns in Gathering Actionable Logistics Data
The solution lies in identifying the transportation partners and technology that can help fleet managers use their own company’s shipping information to get the best of both worlds: a macro and micro-level perspective on the transportation industry.
When asked for their ideas on how to create better benchmarks, many trucking companies say they find it useful to collaborate with other trucking companies. And yet, the same fleet managers say they have a tough time keeping those relationships current. Obviously, there are always issues of confidentiality, as well. There are many reasons shippers don’t or can’t share cost data openly. So, the question then becomes, where do they go to get and properly analyze the right data?
A lack of industry collaboration makes actionable data hard to come by. And don’t expect 3PL providers to share it freely. They also closely guard their data and tactics. Other methodologies such as running RFI’s, RFP’s, or mini-bids can provide some amount of additional cost insight, but there are limitations with the rates gathered through those processes. As a result, without a better way, most fleets set benchmarks having no idea what their competitors are actually paying.
Finding Good Data Sources is Key
Trucking companies, whether through their own work or with a partner, need to build their communication pipes digitally into the supply and demand in the freight market. There are vendors out there who help trucking companies access universal data. This doesn’t mean they are talking to each other, but they can at least gain access to data their competitors use. This helps them better inform their pricing and business decisions.
Hang ups, including detention, can be an important indicator of efficiency for a shipping operation. At the same time, as the data shows, product types and industry directly correlate to the occurrences and costs of detention. Exceeding your industry average for detention being paid, for example, could be an indication of issues on your loading dock, poor production planning, or problems with certain consignees. This data should be tracked and utilized to better inform your business decisions.
Data collection and analysis is not just about hard costs but instead is about finding ways to improve other areas that indirectly impact costs and service performance to customers. An important example is trucking lead time, which has a different benchmark across industries, yet is a direct factor that can impact cost, production, inventory management, sales, and much more. Fleet managers need to understand what logistics data is important as much as they need to focus on proper data analysis.
Final Considerations for Logistics Data Analysis
Trucking companies should use technology, whether internal or provided by a third-party to improve many parts of their business. This is about more than just utilizing benchmarks. It is about actionable ways to increase your bottom line and generate more business for your operation. It’s about digging deeper to identify points of action that allow you to take real steps to beat those benchmarks.
One example of this lies in knowing you’re paying too much detention. From there you can analyze costs and other data points further at specific facilities to help identify where the problems are occurring. Knowing the top offenders for detention enables your company to focus its attention on fixing the problem where it’s needed most and will have the greatest impact.
We are talking about a high level of data accessibility. This is also about and the ability to act and is only possible for a company that has a robust data insights infrastructure. Are you properly managing your logistics data infrastructure? If not, it may be time to analyze how you do business. Consider reaching out to third-party providers or set up proper data analytics process in-house. Doing so can ensure you not only pad your bottom line but succeed and prosper as we move into uncertain times.