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Your Business Has Changed. Has Your Transportation Network?
Many of the inefficiencies we see in freight networks didn’t come from bad decisions. They came from good decisions that nobody went back and looked at. Transportation network efficiency…
Many of the inefficiencies we see in freight networks didn’t come from bad decisions. They came from good decisions that nobody went back and looked at. Transportation network efficiency can decline as businesses grow, and operating decisions accumulate over time.
You know how it goes. A key customer asks for a second delivery each week, and pretty soon other customers in that region are getting two. A route gets stretched to serve a new location and never gets redrawn. The truck added for peak season is still running in March. Order minimums set back when fuel prices and volumes looked completely different are still on the books.
Every one of those decisions solved a real problem at the time. That’s the tricky part. They worked, so they stuck, and now they’re simply how the network runs.
And because freight is moving and customers are getting their orders, nobody raises a flag. But on-time and efficient aren’t the same thing. We’ve seen plenty of networks hit their service targets while running extra deliveries, extra miles and more equipment than they need.
What happens when you actually take a hard look
Here’s an example. We worked with a medical-supply distributor whose delivery patterns had settled in over time. We went through six months of shipping history, 3,597 shipments in all, and looked at delivery frequency, shipment density, pallet utilization and regional delivery patterns.
We found opportunities to consolidate shipments, adjust delivery schedules and change how freight moved through the network. When we modeled the redesigned network, here’s what the analysis showed:
- 29.58% fewer deliveries
- 11.04% fewer annualized miles
- The same total freight weight moved
Read the Case Study: Behavioral Change Monetized →
The distributor didn’t need to ship less. It needed to ship smarter. None of that came from pushing carriers for lower rates, either. It came from rethinking how and when the freight moved, and that’s the part many companies never get around to.
Why a better rate isn’t enough
A competitive freight rate is important, but on its own, it doesn’t tell you much about transportation network efficiency. As FreightWaves recently reported, truckload rates are rising even without a recovery in freight demand, reinforcing why shippers need to look beyond rates when managing transportation costs.
Many companies negotiate strong rates and still overspend on transportation because many of the decisions that drive freight costs are made outside the transportation department. Sales sets delivery commitments with customers, operations determines how orders are fulfilled, distribution builds routes and schedules, and procurement negotiates rates. Each group is doing its job, but all of those decisions affect the same network, and rarely does anyone evaluate that network as a whole.
A lower rate per mile helps, but it does nothing to reduce miles that never needed to be driven.
Shippers do face real constraints. Food, beverage and consumer packaged goods companies have to account for shelf life, receiving windows and customer requirements. Not every shipment can be consolidated, and not every delivery can be eliminated. The goal is never to trade service for savings.
In our experience, though, there’s usually more opportunity than companies expect. Shifting a delivery day can create a consolidation opportunity. Resequencing stops can reduce miles without changing customer delivery requirements. Clear visibility into cost-to-serve often reveals that certain customers, locations or order patterns cost considerably more to serve than anyone realized.
Those opportunities are difficult to see when each decision is made in isolation.
Five questions we’d ask about your network
You don’t need a crisis to take a fresh look. Start here:
1. When did you last look at your order minimums and delivery frequencies?
Do they still match what your customers need and what freight costs today, or were they set years ago?
2. Could you consolidate shipments without hurting service or freshness?
Is there room to build denser loads and make better use of equipment while still meeting customer requirements?
3. Do your routes, facilities and fleet still fit your business?
If your customers, volumes or distribution patterns have changed, your network may need to change, too.
4. Do you know your true cost-to-serve?
Can you see transportation costs by customer, location, case, pound or order? More importantly, can you see which decisions are driving those costs?
5. Which temporary fixes became permanent?
The extra delivery, the longer route, the added truck: each one probably made sense at the time. Does it still?
None of this is a knock on your transportation team. It’s about whether the network still fits the business it’s supposed to serve.
Transportation Network Efficiency: Keeping Up With Your Business
There’s always something in this industry. Fuel prices rise, capacity tightens, customers change how they order, and new markets bring new requirements. You can’t control most of that.
But you can control how your own network is designed and managed. In our experience, the data needed to evaluate it is usually already available. What’s missing is someone stepping back and looking at how all the pieces fit together.
A network isn’t finished just because it’s working. The real question is whether it’s still the right network for the business you’re running today.
Is your transportation network keeping up with your business?
A network analysis can show you where changes in demand, delivery patterns and operating requirements have created opportunities for improvement.
NT Logistics | Point A to Point B. A Better Way.
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