Freight fright - Why is arranging freight such a fright for most transport managers?
One traffic planner responsible for managing the freight between the manufacturing plant to warehouses to customer gave the following list of "issues" that a 3 PL required his attention on a typical Friday evening:
- The warehouse was closed, does the truck need to wait incurring waiting charges or cancel the shipment and incur cancellation charges as well as delays?
- The spot rate had changed for a particular carrier by $300 compared to the regular price, do we go ahead or search for another carrier?
- A change in customer need, requires the material to be redirected mid-shipment to another location....do we go ahead? Who will be expected to bear the charges
- The containerization done was inaccurate and now the shipping documents need to be changed while the trucks waited outside the warehouse
- An order needs to be shipped by premium freight - what are the approvals required and how will billing be done?
These issues were over and above the commonly faced problems relating to accidents, primary carriers not being available or increased fuel rates. One solution is to have rigidly designed and documented approval procedures and "what if" scenarios....but will this work when the scenarios itself change by the minute and most decisions are judgmental in nature taking into account the urgency of the shipment and the customer relationship? A work around is to define a range within which one is willing to compromise one the cost impact. For instance most companies absorb increase in rates if it is less than a threshold value, approvals are done away with for decisions where the cost impact is less than this value. But what does one do with "issues" where there is an impact on lead times? Delays due to wrong containerization, inaccurate documentation or even accidents can damage customer satisfaction in the long run. Some companies use a dedicated traffic coordination team to manage such issues or escalations while others outsource this to a 4PL. The value they bring needs to be measured in ROI terms but few companies go down this route stating the benefits are so evident that measuring this is purely academic....an idea that the transport manager would quickly agree to.