The first step in understanding transportation optimization may be to realize that the best route between two points isn’t always a straight line. As a raw materials supplier, manufacturer or distributor, if you simply shipped every piece of freight directly to its final destination, you might find it difficult to remain competitive.
Transportation optimization means using transportation management strategies to find a balance. The balance between getting your freight to its destination as quickly as possible, minimizing transportation costs, complying with your service level agreements and meeting customer service expectations.
Consider These Transportation Optimization Tactics
Of course, each shipper’s transportation requirements will be unique. You may have more LTL shipments than FTL shipments, or vice versa. You may need to ship across town or across the country. And you might have the resources to maintain a large transportation network, or need to use a third-party logistics company on an as-needed basis.
In any case, while these tactics may not apply directly to your requirements, hopefully they lead you down the road to better transportation optimization.
- Use a Regional Pooling Centre – If you have a number of cargo shipments going to a particular region, pooling can help both LTL and FTL shippers. Instead of sending each shipment all the way from your location to each destination, use a distribution center in the target region to pool each shipment. Then route them to their individual destinations from there.
- Aggregate Shipments – This one requires some tracking and management on the shipper’s part. But if you are able to flag two orders that are scheduled for the same destination and aggregate them, versus separate shipments, you’ll cut your transportation costs in half.
- Maintain a Responsive Transportation Network – A mutually beneficial business relationship is invaluable. But transportation optimization means being able to move your cargo when it needs to go. Using a single transportation service can be a problem if that service is ever unable to meet your requirements. Maintaining several transportation partnerships, both locally and wherever your freight must travel, will reduce the chance of a service interruption affecting your business.
If you found this article helpful, check out our recent post “3 More Tips for Supply Chain Cost Reductions”.