It’s 2020 — self-driving trucks exist, more powerful rockets are launching into space, and companies of all sizes are digitizing the analog aspects of their businesses.
The transportation sector is no different. API calls are quickly replacing phone calls, and algorithms are automating what was previously manual. The march toward a technology-driven supply chain isn’t new, but for transportation departments in many companies, it’s only just begun.
With an agile approach, the goal is to test technology quickly and evaluate its effectiveness iteratively rather than creating a committee and launching an RFP process. This is especially relevant for light-weight technologies that don’t require drastic process changes, contracts, and down payments the size of mortgages. However, it doesn’t mean skipping careful consideration.
So, where should transportation teams who are looking to upgrade their technology stack begin?
Find the Gaps
There is no decent manager in history that hasn’t offered praise for increasing productivity and decreasing costs. Don’t wait for the ask; just map it out.
Where are you and your team spending the most time day-to-day? Which tasks are being repeated frequently that can be automated? Which operating expenses can be decreased or eliminated? What work would the team rather not be doing?
Once you’ve made your list of gaps, rank them within a weighted scale that includes the most important success factors. This could consist of your expectations for:
- Time saved
- Cost recouped
- Revenue increased
- Time to value
- Ease of use
- Ease of implementation
Forecasting expectations are never perfect, but the output of this will serve as your blueprint for success.
Plan the ROI
The quickest way to get the green light for exploring new technology is to rank the gaps you’ve identified by their cost burden and plan the ROI. This can be done easily with a little common sense.
In transportation, common pitfalls that are easy-to-address are staff costs for repetitive tasks.
A few examples:
- Freight Rate Discovery
Formula: Loads Per Day * Staff Cost to Book Load = Daily Rate Discovery Cost
- Tracking and Rescheduling a Load
Formula: Cost to Monitor Loads + Cost to Reschedule Loads = Daily Cost of Time to Track and Reschedule
- Re-booking Freight Loads Given Back
Formula: (Loads Per Day Given Back * Cost of Rate Discovery Per Load) + (Premium Uplift) = Daily Rate Discovery Cost for Loads Given Back
Quick math using these formulas and assuming 200 loads per week, 262 business days per year, $25 per hour staff costs, and a 15% premium uplift with $1,000 COH estimate that this shipper spends $191,260.00 annually for these automatable and avoidable tasks. With a $0 Loadsmart TMS integration, for example, these overhead costs can be significantly reduced or eliminated.
Where your gaps are widest, the technology will likely pay for itself.
Dig into the Technology… and the Company
Now that you’ve gotten everyone on board by pointing out the addressable efficiency gains by automating repetitive but critical daily tasks, the challenge is to choose the best technology and company for tackling them.
What’s unique with supply chain technology companies is that their merits go far beyond their products. Today, technology alone doesn’t move freight over oceans, out of ports, onto roads, and to final destinations. Instead, this is achieved with a combination of companies, technologies, people, and partnerships.
A handful of questions you may ask about the vendors:
- Which companies do they compete with, and how do they compare?
- How successful are they? Are they starting or scaling up, and are they likely to be around in 5 years?
- How’s the customer service?
- What’s their vision? What other problems can they address now and in the future?
- Are they partnered with companies I want to work with?
- Is this an ethical company?
For a proper evaluation, it’s always worth reading what analysts are saying. If you don’t have access to it, ask the vendors.
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