Recently, I came across CH Robinson’s white paper, “Where to Find the Biggest, Fastest Transportation Savings.” I agree with the article’s hierarchy, collaboration and continuous moves can be a difficult way to produce transportation savings. “Even when both pickup and delivery happen at the same facility, inbound and outbound are typically controlled and scheduled by different individuals and departments.” After reading this passage, the article inspired the following thought: Why only look solely at internal touring? This approach hinges on one load from one location. In short, it is unbalanced and unstable. Why not look at horizontal collaboration to create a balanced network?
By utilizing two (or more) shippers’ capacity and freight, a true partnership and viable savings initiatives can be created. Although collaboration is not an easy task, by adding another company’s freight and shipping points, one can gain flexibility within his own network. Imagine what an augmentation to an already robust network can create—more geographic options and cost reduction opportunities. Better planning and preparation reduce a network’s fragile nature and the need to be reactive. This is especially true when a truck shows up to a facility and can only haul to one specific destination. When that one load isn’t ready, what then? Allowing one’s dedicated or private fleet to be entirely dependent on one lane is not a best practice.
While collaboration can reduce emissions and cost, it can fail due to a variety of reasons, not the least of which is competing goals. Too often, in the name of cost savings, companies will try to force a fit with others. True collaboration takes effort and the willingness to share information. A company’s logistics network can be complex, and collaboration can intensify its complexity. However, by using the right neutral facilitator, the shipper can create a multitude of transportation options with other shippers. With balance and flexibility, a transportation network can stand on its own, not worrying about one piece causing it to crash.
CH Robinson Whitepaper Source
As we all forge ahead into 2012, with January and February already past, it is easy to see how the year can whip by. Before you know it the busy season is upon you and the quest to find additional transportation capacity at crunch time begins. The primary way to combat the hectic busy season from ruining your holidays is to start forming partnerships early in the year.
For 2012, we have already seen many partners thinking ahead and engaging us to cultivate relationships while stress is low and year long value can be realized. Instead of waiting until it is a need, companies are utilizing TidalSeven to pull value from their transportation networks now.
In the past, these transportation network partnerships took years to setup and even longer to obtain value from. Often times only to end in lost productivity and frustrated partners. Today, we can build transparent partnerships that provide companies recognized value within the same year. TidalSeven manages the relationships while providing full transparency to ensure partners find mutually beneficial results for years to come and meet their organizational goals and initiatives. A refreshing new approach to managing your capacity without the buy-sell relationships brokers and 3PLs thrive on.
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On average, the law of averages fails every time. Well, almost every time. Shippers tend to want to package their freight volumes into nice neat packages. The truth is that the transportation market will vary. January is slow and September can be robust, especially for those in the retail industry.
However, most shippers tend to either display their respective volumes annually or by monthly average. They will end up calling their carriers in September to ask, “Where is my capacity?” This is the traditional way of thinking. Annual volume equals annual capacity needs, until the fall rolls around.
What if there was an alternative? I can think of two solutions:
- Instead of simply sending out an RFP with annual volumes, why not show detailed calendar year data. In other words, list volumes per month from the prior year’s January to December, for each o/d pair. This way, your service providers know what to expect as the calendar year progresses.
- Shipper-to-shipper collaborations. They can not only provide year round stability, but also optimal flexibility. By utilizing private and dedicated fleets, a shipper gains the ability to have capacity that can flex with the market. The fleet’s network will remain constant, but its capacity can seasonally rise along with the shipper’s needs.
Unlike a one way carrier, whose service territory can change, a private or dedicated fleet continues to serve stores or end users. Collaboration takes trust, dedication and time, and in many cases is most efficient when coordinated by a neutral party. In either solution, transparency is key and creating strong relationships with your transportation providers is a must.
“Collaboration” is probably the second most overused word today (behind “strategic”). However, rarely do shippers appreciate how difficult collaborating can be. While collaboration can reduce emissions and cost, it can fail due to a variety of reasons, not the least of which is competing goals. Too often, in the name of internal initiatives, companies will try to meld with each other, attempting to put the proverbial square peg in a round hole. Do you approach customers or suppliers? Who should lead the initiative? How much information should be shared? With so many questions, how in advance can companies know that the peg is a fit? This can be solved by using a trusted, experienced and neutral party.
While it may seem counter-intuitive, many times the hardest part of collaboration is finding the right shipper partner. This could take years, many failed attempts and a lot of FTE effort. A company’s logistics network can be complex, and collaboration can intensify its complexity. If the two partners’ service platforms or goals aren’t in sync, customer service and on-time performances could be negatively impacted.
So, how does one fit a square peg in a round hole? Simply put, he doesn’t. The best course of action is to engage a neutral party with expertise to facilitate the process. The neutral party vets the potential partner, prior to collaboration. With the right due diligence, the shipper knows in advance whether or not his peer will be a good fit. This saves time and prevents any unnecessary square peg in round hole frustrations.