Shipment optimization allows companies to save money and valuable time while also helping streamlining your freight movements. In this article, we dig into the shipment optimization details for transportation management, discuss strategies businesses can use to optimize their transportation network, identify the role that technology plays in this process, and show how 3PL providers are essential to transportation management success on this journey.
What is shipment optimization for transportation?
At its core, shipment optimization involves the use of people, processes, and technology to make sure every part of the shipping process is accomplished to save time, energy, and money, all while ensuring deliveries are made on time and in full. Whether it’s hiring, packing, managing, shipping, or choosing a 3PL partner, an optimized shipping operation coordinates all parties in the same direction.
Businesses want optimization to boost their bottom line and direct them towards sustainability. Owners, investors, retailers, and suppliers closely review data to help them grow profits while benefitting the environment. When truckers spend less time waiting to load or unload, supply chains create fewer tons of waste, materials are packed with recyclable or compostable materials, and trucks are packed to capacity for every trip, business owners can feel good about meeting their obligations to both shareholders and the planet.
How does technology help optimize shipments?
Here are ways innovation propels optimization:
Route optimization
Inefficient routing creates missed delivery dates, higher fuel costs, and, worst of all, unhappy customers. Real-time, automated traffic and weather data ensures drivers operate with accurate travel estimates.
It also allows drivers to change schedules quickly if they encounter an accident on the road, are reassigned to a higher priority job, face a late connecting delivery, or can’t complete the job, the system reschedules it automatically to the closest qualified worker.
Load consolidation
When freight volumes run less than a full truckload, deliveries are less efficient and more expensive. In the past, shippers have used less than truckload (LTL) services or simply delayed the delivery until inventory filled the truck. This inefficient solution often forced customers to wait well past their order’s expected arrival date, or cost businesses more to ship late orders by air.
A 3PL can pack and move shipments efficiently, essentially carpooling your freight. Their transportation management systems (TMS) and warehouse management systems (WMS) allow freight managers to efficiently pack many trucks simultaneously and track their progress.
Real-time tracking
As mentioned in the last section, TMS and WMS are ideal tools for letting shipping companies use real-time tracking to pinpoint the exact location of a vehicle, employee, or inventory. A combination of GPS and logistics databases allow packages to be scanned, assigned a vehicle, continuously monitoring and providing departure and arrival notifications.
Real-time tracking optimizes shipping and improves a company’s overall performance. Clients can be assured of a transparent delivery process. If a truck gets stuck in traffic or construction requires an alternate route, real-time tracking ensures that dispatch is aware and can reassign the delivery to another vehicle or alert the customer their delivery may be delayed.
Data analytics
Data analytics helps shipping companies find efficient routes accounting for distance, delivery time, weather, and traffic. This lowers transportation costs and reduces fuel consumption. Data analytics helps when evaluating potential carriers and measuring performance. Managers can make data-driven decisions on optimizing allocation of shipments.
A 3PL can maximize the benefits of data analytics by using business intelligence (BI). This technology allows shipping companies to turn a large volume of data into user-friendly dashboards and reports. These provide granular detail that allows managers to dig deep into the fleet’s performance and quickly identify bottlenecks, reduce waste, and cut costs.
How can companies optimize their transportation network?
Here are strategies companies can use to optimize their shipping operations:
Centralized distribution centers
Centralized warehousing’s benefits include lower costs, more efficient inventory management, and improved customer service. It involves a handful of strategically-placed storage hubs (or sometimes just a single hub) rather than having to manage many locations across a large area. This cuts costs for rent, utilities, and staffing It also simplifies inventory management, lowering the risk of having too few or too many of any item.
Carrier Portfolio Management
3PL providers are often necessary partners who can help provide shipment optimization for transportation management. They bring an expertise in technology that can provide real-time tracking, optimized route management, and communication strategies that allow managers to focus on growing the business, rather than managing endless customer complaints and requests for shipping updates.
Benefits of Shipment Optimization
Shipment optimization is a multifaceted endeavor that extends far beyond mere efficiency and cost savings. While these aspects are crucial, the complexity lies in the diverse objectives it serves. Beyond streamlining operations, shipment optimization can pivot towards enhancing service levels or aligning with specific customer business rules. It's not solely about achieving optimization in a vacuum but also leveraging it strategically to bolster other facets of the business.
Whether redirecting transportation moves to synchronize with inventory management, prioritize customer satisfaction, or comply with stringent regulatory frameworks, the true artistry of optimization is its adaptability to serve as a catalyst for holistic business enhancement. This intricate interplay between transportation and broader business goals underscores the dynamic nature and significance of optimization within a company's logistical framework.
