Okay, already, supply chain interruptions are daily news items, and transportation costs are increasing at a dramatic rate (sometimes mid-shipment). Now that we know that, what can consumers of transportation service do about it? You are the Number One expert regarding your company’s needs; it’s your supply chain, and your budget, so you are the one to take charge.
Shortage of capacity in the transportation industry is not a new problem. In 2011, Highroad Consulting, Ltd. conducted a seminar, Future Shock! Even then, industry experts discussed the need for shippers and receivers of freight to drive efficiencies into their supply chains due to the developing shortage of truck drivers and regulatory changes, concurrent with increasing freight volumes as forecasted by USDOT!
This is not a short – term issue – freight volumes will continue to increase, and absent some significant changes, the network will be capacity constrained, and pricing of transportation service will simply be based on supply and demand.
Some trucking companies have told some shippers that it will be weeks before they can pick up their loads. While not without merit, shippers have reacted by diverting shipments from truck to rail, ensuring they have equipment to load and, surprisingly, at a lower cost. While this can be a short – term fix, this strategy alone does not address the bigger problem for the long term, and it even exacerbates the railroads’ capacity dilemma. So, whatch’a gonna do about it? Unfortunately, this has not developed overnight, so there is no quick solution.
Short term, shippers need to do whatever is necessary to keep their supply chains running (Step One – react!). Concurrently, though, they need to develop a long-term strategic plan to ensure timely delivery of products to their customers, while confirming they are cost competitive (Step Two – Supply Chain Strategy!) Highroad clients that developed these strategies have established their companies as market leaders.
There are no generic models to do these analyses. However, there are four basic steps to identifying opportunities for your strategy:
- Determine the current total costs of your inbound raw materials, transit times, etc. and review your inventory management capacity and practices.
- Review of your outbound shipments by mode, volumes, transit times, total costs, service choke points. Consider the various options. Forecast freight rates for logistics modeling.
- Develop What If? scenarios, including your growth objectives, and perform logistics mapping and modeling of the various options.
- Analyze the data, develop and implement your supply chain and transportation strategy.
We’re here to listen to your needs and to respond to your questions regarding your strategic plan. There’s no charge for a 30 – minute consultation.