Visibility has long been a priority for supply chains teams. In fact, based on the Descartes/DC Velocity 2018 Annual Transportation Benchmark study, 67% of shippers ranked visibility as a critical capability to run effectively. Traditionally, the challenge has been to translate visibility initiatives into tangible business benefits, going beyond the transportation team and extending the value across the enterprise.

With customer service driving much of the value for visibility, the study found that 80% of laggards struggle to get their project approved versus 30% of shippers who view transportation as a competitive weapon, and experienced no approval obstacles.

Based on experience with thousands of customers, here are 5 areas where real-time visibility creates value:

  • Deliver superior customer service
  • Reduce labor costs
  • Cut penalties and chargebacks
  • Lower detention fees
  • Improved dock and receiving operations

Deliver Superior Customer Service

In today’s “on-demand” world, customer expectations are driving increased visibility that requires more frequent updates and is expanding to include more stakeholders. One of our customers is a food manufacturer that serves medium and large grocery chains, as well as distributors that deliver to small stores and restaurants. Customers are served through a mix of truckload and LTL carriers, comprising 45,000 shipments per year. Prior to Descartes MacroPoint™, they had visibility from carriers through EDI, although only for a portion of their freight moves. The updates were too infrequent, however, and they usually only found out about an issue after it was too late. Furthermore, there was no way to proactively give the end customer visibility. With Descartes MacroPoint, they now have real-time updates every 15 minutes. Additionally, they receive notifications automatically for shipments that are running late, and can provide their customers visibility through a portal. By being more proactive and providing quality tracking information, the end customer has been able to streamline dock receiving, and improve the planning of downstream deliveries. A number of the grocery customers have expanded visibility across their logistics and store operations teams.

Reduce Labor Costs

Reducing costs in the track and trace team is clearly the place to start; however, our best-in-class customers have extended visibility across departments including customer service, merchandising, store operations and manufacturing to drive maximum value. Within the track and trace team, it is worth conducting a detailed time and motion study. The operational cost savings falls into a few categories: (1) Reduced number of proactive calls to carriers (2) Reduced data analysis if they are currently using EDI (2) Lower “emergency” calls from sales or customer support reacting to late or missed deliveries (4) Customer support and sales receive fewer calls from customers. Even for a relatively small shipper with, for example, 200 shipments to monitor, each one might take 2-3 minutes to check on per day. That results in, collectively, over 8 hours per day of effort that could be spent on more proactive activities. In large shippers, we have seen this savings equate to over $250,000. One customer studied the impact of a late delivery with their customer. Typically, the chain flowed through sales, was escalated to sales management to customer service, and ultimately ended up with a “fire” in transportation. There were 6-8 people involved, a number of conference calls, and they determined each incident cost them over $650. With late deliveries occurring 3-4 times per month, this was costing the organization $27,300 per year, never mind the impact on customer service.

Cut Penalties and Chargebacks

Real-time freight visibility provides predictive ETAs, enabling shippers to identify and work with their customers more collaboratively to reduce late deliveries. Use cases include retail deliveries with strict OTIF requirements, just in time shipments to manufacturing plants, and deliveries to “project sites”. One manufacturer of building supplies delivers to building sites. Deliveries are tightly coordinated with the project schedule and work crews. Without real-time freight visibility, a missed delivery window could result in over $10,000 in penalties. By having visibility to all freight, and being able to easily identify deliveries that are at risk, the company can now coordinate with its customers who have more flexibility to adjust crew schedules, thereby minimizing any issues.

Lower Detention Fees

According to DOT, “Accurate industry-wide data on driver detention does not currently exist. Available electronic data is unavailable for a large segment of the industry.” The challenge when delivering to customers and managing detention is that, without electronic data, there is no objective record of detention. Carriers may have incentives to charge detention to supplement a low rate lane, and shippers go through a tedious process of getting the detention bill and going back to the consignee to validate or refute. Mix in 3PLs, and it gets even more ambiguous. With no system of record, it too often turns into a finger-pointing exercise and inefficient use of time. With ELD-based location data and configurable geofencing, a shipper gets a system of record of arrivals and departures. Proactive notifications can also ensure the issue is addressed in real-time, with all parties and verified data. This can lower detention fees significantly. One customer was incurring $235,000 in detention fees, and reduced this by almost $90,000. Finally, with accurate detention data, the freight audit process is greatly simplified, which saves time between accounts payable and operations.

Improved Dock and Receiving Operations

While customer service is increasing in importance, inbound freight is another area of opportunity. This is more complicated as there is usually a mix of modes, as well as a split between pre-paid (supplier managed) freight and collect. Higher volume distribution centers are typically booking carrier appointments to improve the planning of their dock, warehouse staff, and inventory needs for downstream. Without good visibility, however, a late truck can cause a cascade of delays, which result in overtime costs and detention. Without real-time visibility, the receiver typically does not know there is an issue until after the truck is late; however, predictive ETA and proactive alerts provide enough lead time to react. For example, a delivery is scheduled to arrive at 10 AM. Based on real-time visibility, by 8 AM, the receiver knows the truck will be 60 minutes late. The receiver can now review their dock schedule and warehouse labor. With visibility into other expected deliveries, it could be possible to swap appointments with a carrier that is ahead of schedule. Alternatively, the warehouse labor can be re-allocated to other activities, as opposed to leaving them waiting around until they know the truck is late.

Get Started Today

The freight visibility market is moving very quickly, and first movers are taking advantage of the opportunities to create a competitive advantage. In order to assess how freight visibility can help your operation, start by considering the following:

  • Determine how often you miss customer deliveries. How does this impact your relationships? Interview some customers on what they expect, and what they are seeing from other suppliers. In markets where there are chargebacks or penalties for late deliveries, quantify the impact and show how visibility can reduce those costs.
  • Conduct a time and motion study on your track and trace team. Not simply on the activities to get visibility, but understand how they support other areas of the business. What is the impact in the other areas: customer support, sales, store operations, etc. What tools are they using today? Spreadsheets, email? How much is reactive versus proactive?
  • Review your detention charges. This includes both for customer deliveries and supplier pick-ups. If you do not have a dock scheduling system, include your own facilities. Do you have detention data that you can share with trading partners and identify the best areas of improvement?
  • Review your inbound deliveries. Do you know which carriers and suppliers deliver on time? How many times are deliveries late? What is the result in overtime, lost manufacturing time, or downstream implications for inventory?

With technology changing rapidly, there are always new use cases. Do these fit your operations? Are there alternate ones you are looking at? Let us know.

Written by Brian Hodgson

Senior Vice President, Industry Strategy Product Management