December 14 2023 | 13 Min Read

Why transactional isn’t the way to go when approaching your logistics

Posted By
Wendy Mackenzie
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Why transactional isn’t the way to go when approaching your logistics
Comparing transactional LTL shipping to a freight management solution comes down to a one-day-at-a-time versus long-term approach to your logistics operations. We'll show you why chasing the lowest-cost rate for each individual load is hurting your bottom line and your business integrity.

Before we discuss the nuances of the best model, let’s look at the pitfalls of the near-sighted alternative.

Yes, we said it. Transactional does not look at the long-term effectiveness of your business, where your customer satisfaction will be in six months, or the impact of your damaged and lost shipments. It will look like the goose that lays the golden egg until you need the perfect omelet every day, and an egg, shiny gold or not, is nowhere to be found. Because there is no obligation, no relationships, no accountability here. I mean, we are talking about an egg. Or a stubborn goose. Either way, you’re on your own to find a solution.

Transactional shipping only looks at immediate, upfront costs without any future planning.

Here are some of the pitfalls of a transactional shipping model:

  • Rates fluctuate, and you are at the mercy of rising rates without a fixed rate agreement in place.
  • Looking at each load separately, you lose the benefits reaped by consolidating your shipments or considering your warehouse and operations locations.
  • By taking a narrow view of one shipment at a time without weighing up what has or hasn’t worked in the past you lose the opportunity to find efficiencies going forward. Often you won't have historical data or the tools to analyze it.
  • If you don’t care about long-term carrier relationship building, have no doubt they won’t care about you either.
  • In your drive for the lowest rate, you’ll constantly quote multiple carriers, which is intensive and frustratingly slow.
  • Even if you don't realize it, you risk subpar service, damages, and billing problems for a great price.

How freight management specialists look at your shipping differently

First, let’s make one thing clear. Logistics consultants like IL2000 are not brokers.

Freight broker (noun): an agent who matches buyers and sellers on commission. They look at moving only that one piece of freight.

We focus on relationships with both our clients and carriers. It's not a quick swipe left or right in matchmaking; it's understanding your business. Rather than arranging a one-off transaction, we learn your business inside and out and understand your unique requirements. Developing that account familiarity helps us match your – preferences, personalities, working hours, freight characteristics, dock rules – with the carrier that will handle your freight reliably every single time.

Because we take the same care when developing our carrier network, you know we have done the selection and vetting for you, ensuring we will send your freight with only high-quality and reliable carriers that meet your specific needs. We know what good carrier compliance is, including good on-time performance (OTP: The ins and outs), minimal unexpected charges or damages, and a long-term relationship with locked-in rates, so you can leave that to us and focus on your core business needs.

Managed transportation experts are price-sensitive but recognize that damaged shipments, billing mistakes and service issues must be factored in. You will pay less for your freight and get better service. Managed transportation has less percentage of rebills or invoice corrections. It’s about your total cost of shipping. You may occasionally pay more for a shipment but, overall, will incur lower logistics costs throughout the year.

And here’s a big differentiator. We have your business at the core of our mission. It's not about our business but yours. We honor our clients’ profitability as we do our own.

The big divides

There are many advantages to using a proper freight management approach over a transactional approach. Here are just a few of the biggest differentiators.

Relationships

We’ve touched on this earlier but can't emphasize it enough. Relationships matter. Whether it’s having a dedicated enterprise account manager or an entire logistics planning pod at your beck and call (oh yes, we have a 15-minute rapid response system in play where an experienced supply chain specialist will actively work on a solution to your supply chain problem in under 15 minutes), know that someone has your back.

Data Analysis

Those same experts are the ones who take the time to walk through all your shipping data with you. Because we store all your data, we can paint a clear picture with insightful recommendations. We’ll also customize a PowerBI dashboard around what figures you’d like to see regularly, train your teams in what the results and trends mean for your business, and help you take proactive action on those insights.

We can also do cool things like run a center of gravity study to determine the best place from which you should distribute. That’s about as far from transaction thinking as you can get. If we find the optimal point of distribution for your operations, we can eliminate higher freight costs, slower delivery times and greater uncertainty.

Continuous Improvement

Continuous Improvement Process StrategyYour logistics functions are critical to your success. That's why taking the time to plan and mitigate risk is crucial. But that’s the bare minimum.

We're consultants at the heart of it and focus on continuously improving your shipping operations. We’ve developed an entire process around it.

We have weekly meetings and quarterly business reviews in which we work on strategic development and complete visibility of your supply chain. This makes the difference between just moving freight and having an efficient, cost-effective supply chain with clarity at all times.

The cyclical review, education, optimization and strategizing of your supply chain:

  • eliminates uncertainly and expensive mistakes
  • offers data insights to enable enlightened decisions
  • improves customer satisfaction
  • enables supply chain planning
  • strengthens your position in the market

A fully customizable TMS

There’s tech, and then there’s tech.

Nearly all carriers have at least a basic tracking system.

Most logistics companies offer some sort of "TMS" that they claim will solve all your problems. But more often than not, these systems are outsourced, highly inflexible, and either do the bare minimum or cost you a fortune to integrate, train and utilize.

That’s why we own ours. We started developing our proprietary TMS over twenty years ago; this software was the foundation of our business. We have been growing our transportation management system ever since – developing new features, catering to the real needs of our clients, addressing industry demands even before they happen.

The IL2000 TMS offers quick, easy shipping and full freight visibility without information overload. It will improve how you deal with your customers. And the best part is, we don’t even charge for it because it’s a critical part of how we do business with you

Strategic alignment

This isn't about someone saying, "We think big, don't worry." It's about having a shared vision for success that incorporates clear objectives and goals. In the short term, that could be as simple as getting your goods delivered to your customers on time more often, but on the other end of the spectrum, we could be looking at load consolidation, reducing the costs of exceptions, minimizing unexpected freight costs, managing freight disputes, and improving your customer satisfaction score.

This is a collaborative effort where we work together to optimize your logistics and solve challenges. In the process, you’ll learn more about what’s eating away at your supply chain efficiency and identify the cause and effect of different practices, from old and hard-to-break habits to the success of new approaches.

Before we begin working with any company, we do an in-depth (and totally free) supply chain analysis based on 90 days of your shipping data and an in-depth departmental discovery. This study allows us to identify the real issues and align with you before any solutions are put into play.

Real solutions

Many consulting houses will try to take one of their fabricated solutions and fit your business into it. But who says a solution developed for another business is best for you?

We don't believe in cookie-cutter approaches. Or pancake molds if we’re still talking breakfasts, eggs and omelets. We have customers across many different industries and have learned how to navigate the specifics of each market. We’ll use that industry knowledge and transportation expertise to break down your specific needs and craft a real, customized solution just for you. At this point in time.

The timing is an essential factor in our continuous improvement process. We don’t put a plan in place, mindlessly implement and then hold steady for the next 10 to 15 years (which is how long many of our customers stay with us). We're fine-tuning, recrafting, and doing massive overhauls in our plans whenever we need to as your industry fluctuates, your customer needs change and the world transportation market develops.

Trackable KPIs

Red yellow green KPI blocksA big part of freight operational success is seeing where you are and knowing where you want to be. Putting clear, sharable KPIs in place is an excellent place to start. Agree on what’s most critical to your success. Track it and use those results to drive down costs and improve service.

With this type of cooperative plan, the partnership becomes one of shared risks and rewards.

Flexibility and adaptability

The final divide we’d like to touch on is flexibility and adaptability. Because we are truly partners and in it together for the long haul, adapting our teams and software solutions to make your operation successful is a given.

Your business needs change with time. The market conditions fluctuate. We'll do whatever is necessary, from hiring and expanding teams to building new features on our proprietary TMS. We’ll set up the optimum BI dashboard and explain the insights and our recommendations routinely, not once in a blue moon (the last one was on Aug 30, 2023, BTW). There is no guesswork on how we manage your transportation. In fact, our logistics big brains from every team (client services, TL, LTL, freight audit, BI &  reporting, product development) all come together to devise the best solution from every angle.

Grab at efficiencies, not dollars

Our best advice, and we give this for free, is to go deep into your supply chain and find the best solutions for your logistics. Overall efficiencies will save you time and money and decrease freight costs.

Looking at only the dollars spent on each individual shipping transaction doesn't consider the big picture and downstream effects on everything from reliability, quality, and customer satisfaction to your bottom-line costs.

We’d be happy to look at your data and provide a free supply chain analysis to help identify where you can find these wins. Take the easy, obligation-free first step to fueling your supply chain success.

 

Topics: Logistics Management, Supply Chain Management, Freight Costs, 3PL, Business Intelligence, LTL

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