Why is it that some companies excel at transportation management and others don’t? Is it the choice of transportation management strategies, practices or even technologies? Or is transportation management value a self-fulfilling prophecy? Descartes recently conducted its 6th Annual Global Transportation Management Benchmark Survey on transportation management strategies, tactics and technology and how business leadership’s perception of transportation’s importance impacts both financial performance and growth. The results over time are amazingly consistent—even through the pandemic.
Making the Case
Results of the survey were examined from two perspectives: leadership’s perception of the value of transportation management and company financial performance. For both questions, results at high- and low-ends of the answer spectrum were analysed to identify any potential correlation between the two and other key questions in the survey. For the strategic importance of transportation, the survey identified respondents whose leadership considered transportation management a “Competitive Weapon” or “Not Important”. Equally, for financial performance, the survey identified those companies who were “Top Performers” or “Poorer Performers”.
Comparing the results of leadership’s view of the importance of transportation management with the company’s financial performance highlighted a compelling link between the difference in thinking and financial performance. Respondents who said they had industry leading financial performance (Top Performers) were almost two-times more likely to have business leadership who believed that transportation management was a competitive weapon. Simply put, companies are much more likely to have better financial performance when the executive team sees transportation management as critical to success.
The same correlation applies to company growth. Transportation management is an enabler of high growth companies that not only want to get more goods to market but also do it in a way that enhances the customer experience, competitive position and brand.
Getting leadership to buy into the potential value of transportation management requires putting a spotlight on its ability to contribute to the success of the business by using metrics and practices that get executive.
Competitive Weapon respondents think more broadly about the impact of transportation management on the overall business. Leadership that believes transportation management is a competitive weapon also does a much better job at capturing its value. Too many organisations are only using traditional logistics measurements, such as delivery costs and on time in full (OTIF), as KPIs; however, transportation management value goes well beyond getting goods on time and in full to customers.
Another important aspect of realising (and showing) more value from transportation management is the degree to which transportation-related information is shared. Transportation information is not only valuable to the internal supply chain, but also to sales, customer service, customers, trading partners and carriers. This is one of the reasons why real-time transportation visibility is top of mind for many organisations. Not only does it provide insight into actual shipment status and the ability to act according to customers’ needs, but it also provides data that can be fed back to improve planning processes. There is an entire transportation lifecycle of shipment information that can be shared to add value to the enterprise and all supply chain participants.
Technology plays a critical role in transportation management strategies and the two are highly intertwined as technology-based capabilities can define the approach to strategies. Leading-edge strategies need leading-edge technologies to support them. There is an element of risk here, but there are also numerous cases where the combination of innovative transportation management strategies and technologies delivered results that made a material difference to the companies that deployed them.
This is particularly important in today’s world where customer expectations and demand has increased: for example, organisations need to provide customers with the best possible last mile delivery, and being an innovator and early adopter of technology can optimise these logistical operations. In order to execute an efficient last mile process, there needs to be up-to-date, real-time data and insights which are crucial to improving delivery operations. This will improve time and cost savings, alongside greater flexibility and convenience for customers.
Connecting the Dots
Transportation management success is a self-fulfilling prophecy. When leadership believes it is a competitive weapon, the company performs better financially and grows faster than others with management who consider it unimportant. Why? Because the belief that transportation management is a competitive weapon turns into actions that make a difference. Top performers measure its full impact on the business. They do a better job at leveraging transportation information for the benefit of the entire supply chain. Their transportation management strategies and technologies are focused on exploiting new thinking and capabilities that make a difference to enterprise performance. For those that don’t think transportation management is important to success, it’s almost akin to entering a fight with one arm tied behind their back—and their financial performance shows it.
Find out more here: https://routinguk.descartes.com/our-solutions/transportation-management