According to an American Shipper report, 53% of companies aren’t using Business Intelligence to collect and analyze their supply chain data. This poor adoption rate implies companies are still performing manual data analyses (translation: excel spreadsheets). And there’s no way companies using excel spread sheets have quick reaction times when their shipping landscape changes. What they do have: delayed reactions to shipping events and hence an over-abundance of risk in the form of shipping cost increases and delivery delays.
A Transportation Management System (TMS) for parcel shipping with Business Intelligence provides shippers with an easy way to aggregate and report transportation data; however, companies can miss savings opportunities if they don’t put enough thought into how they want to use this shipping data once they have it. Optimizing a parcel TMS’s Business Intelligence technology requires companies to thoughtfully define how they will apply the technology and how they will set benchmarks and measure against them. These three tips can help:
1. Think ahead.
A common question our prospects ask is, “How much can a TMS for parcel shipping with Business Intelligence save?” We always respond with a range (i.e., 10% – 30%). One of the reasons for providing a range is the degree of change the shipper is willing to consider with regard to its transportation optimization strategies. For example, if for some reason a shipper cannot add another carrier to its transportation mix, then the shipper is working within a fixed set of variables, and savings might be on the low end of the range. In contrast, the high end of the range occurs when shippers have the flexibility to look at the existing transportation landscape and question what could be done differently, such as adding a new carrier or even a new distribution center. For those willing, Business Intelligence is an opportunity to reexamine distribution strategies and consider all possibilities, asking the question, “What if?”
2. Define KPIs.
Without KPIs, transportation management becomes subjective. For example, it’s not uncommon for supply chain leaders to tell us they’re worried about how carrier rate increases could “shake out.” What does “shake out” mean? If the shipper has reduced parcel shipping costs by 8% and increased on-time delivery rates, then it is likely meeting objectives despite the carrier rate increases. If the opposite is true, however, the shipper will have to roll up its sleeves, identify alternatives such as expanding the transportation network beyond familiar carriers, and use Business Intelligence to run simulations to identify optimal strategies. Shippers that set a KPI up front will be amazed by how quickly they can prove the ROI on a TMS for parcel shipping with Business Intelligence.
3. Run simulations.
There are usually myriad opinions within an organization’s supply chain team when it comes to reducing transportation costs, and one way to transition from opinion to fact is to use Business Intelligence to demonstrate the value of different shipping scenarios. Running transportation simulations can identify where significant savings opportunities exist, challenging the norm and comparing “what if” to current performance. Shippers have a “sandbox” to approach transportation scenarios with a creative mindset and verify and measure the impact of various scenarios on the bottom line.
Get the Most out of your TMS for Parcel Shipping with Business Intelligence
A TMS for parcel shipping with Business Intelligence can unveil opportunities to increase throughput, decrease transportation spend, and improve customer service. However, it’s only as effective as the deployment strategy behind it.
Are you optimizing your supply chain software investments? Contact us today for a free shipping data analysis.