Transportation modes and carriers are one of the main concerns of logistics experts and leaders of the industry. More often than not they will tell you that some of the biggest blunders they have made in their career have to do with transportation-related incidents. Here at David Kiger’s Blog we often mention the fact that sometimes companies choose their transportation partners based on price alone, and that will most times end up becoming a very bad and expensive decision in the long run. It is important to understand that transportation is by no means a small deal, as the numbers clearly state. Just two years ago, yearly shipments came in at over 16,000 million tons and with a price tag of almost $20,000 billion in the US alone, which once again shows that transportation is by far the most expensive, important and influential factor of logistics and the supply chain.
Right from the start, companies face the uncertainty of selecting a transportation mode that will best suit their needs, and in order to start making the right decisions from the start, they need to thoroughly understand the product they are shipping and the capabilities of the carriers they may be using. If you do not understand your product well enough, you will make terrible mistakes when deciding how to ship and whom to use to do so.
Knowing about the product alone is not enough either, you also have to have ample knowledge about logistics and understand the terminology, capabilities of shippers and regulations that govern your theater of operation.
Do you know the difference between the actual transit time and the published transit time? It is important for processes to be absolutely transparent and for you to understand that the time that sometimes gets published and used to calculate delivery estimates is not always accurate and it doesn’t always reflect a true picture of how long it really does take for items to arrive. Considering that weather is fickle and that there are other considerations that sometimes fall outside of the spectrum of control a company has over their shipments, then you should be very careful when talking transit times with customers in order to give the most up to date and realistic information available, considering all the different variables.
Cost cannot be accurately calculated unless you consider what some experts are calling the “total landed cost”. The total landed cost refers to the actual costs of shipping an item by calculating all the different variables that make the real price of something go up or down. For instance, if you decide to go via ocean freight because it is apparently cheaper, but making that consideration based only on the immediate cost can be quite irresponsible. Think about the fact that ocean freight sometimes may have a transit time of 40 days, but that time may end up doubling due to unforeseen facts that may affect the shipping process. Did you calculate how much it is going to cost to receive your shipment another 40 days later than you originally planned? Is it worth the initial resources that were saved, or did it end up being more costly than you originally thought?
It is important to be flexible and diverse instead of trying to fit your company’s needs onto a one-size-fits-all solution. Sometimes the best approach may seem unconventional at first, but when you do the math you realize that is the most sensible solution. Not everything needs to be shipped the same way, and not everything must be sent together. Think about the first thing we mentioned in this article; understand the needs of your company and the specifications of your product first.
Value instead of price, should the main concern on your mind when selecting carriers and shipping partners since value takes into account all the factors that you should consider when judging whether or not, you paid a fair amount for services. Consider customer service, reliability, speed, efficiency, transit times, vendor quality and other aspects that can help you look at the big picture and truly appreciate what it is that you are receiving from your carrier. Lower-cost carriers can become a nightmare and end up being the most expensive part of your operations, because due to their mistakes or inability to properly get the job done, you may end up having to account for losses, delays and customer dissatisfaction that will later turn into diminished profits. This point is particularly important, because it doesn’t mean that some carriers are bad, what it means is that they may not be the right fit for your needs, so you should look beyond lower prices when you think you are looking for ways to reduce costs, because both things could be mutually exclusive in the worst of cases, and that just means bigger headaches and more unforeseen things you must eventually have to deal with.
* Featured Image courtesy of Pixabay at Pexels.com