The COVID-19 pandemic has brought into stark relief the need for shippers and carriers to be flexible and adaptable. And perhaps most importantly, have a foundational data strategy enabling fast, accurate analysis and decision making. Because of this, it has never been more critical to have reliable data and actionable intelligence about supply chain performance. Not to mention the tactical, financial, and transportation service metrics that drive the bottom line.
We sat down with Nate Endicott to discuss data-driven decision making and common dilemmas faced by supply chain and transportation managers. Endicott has over 15 years’ experience in global transportation organizations and has been the VP of Global Sales at RateLinx for 5 years. He helps shippers gain visibility into their data to enable good, strategic decision making. Here, Endicott explains the best practices that lead to better control and superior results for a company’s freight spend management.
Q: Incomplete or untimely data is a core issue for supply chain managers. What are the primary challenges?
A: We are all on a continuous journey searching for reliable data. The landscape seems to change daily. A key challenge is having all the relevant and meaningful data you need, from all your systems and parties. Shippers have the order, shipment, item, inventory, and tracking in disparate systems. Similarly, carriers have tracking and freight invoice data in different systems. As a result, quality and latency become a real issue that negatively impacts your decision making.
Data quality properly defined is data that represents the real world. We measure it in three dimensions: Accurate, complete, and timely. Accurate means the right value in the proper form. Timely is available and accessible today, not days or weeks later. Lastly, complete is having all the necessary characteristics or attributes and is conclusive.
Q: What are some steps supply chain managers can take to resolve this dilemma?
A: First, recognize there is a problem that can be fixed. However, the problem can seem so daunting that managers throw up their hands and do the best they can with the data they have. But it doesn’t have to be this way.
The old model of hiring an audit firm to find after-the-fact errors doesn’t solve the issues that caused the errors. Instead, understanding your carriers, being respectful of their needs, and working with them in a non-confrontational manner, is key.
You need to find a solution provider who is not a data aggregator. Instead, find one whose core competency is data quality remediation and continuous improvement. The provider must be neutral, with expertise at rooting out problems, and have demonstrated success fixing them. And it’s not just a one-time fix. Rather, it’s a strategic engagement that deploys tools, processes, and practices. It works side by side with you to eliminate root causes. It readily identifies data issues before they become embedded and skew your strategy and decision making.
Q: How do you uncover and fix root causes?
A: In freight transportation, we’re dealing with a marriage of systems, people, and processes. With data in multiple systems, accessing the information is typically not an issue. But, each of these systems has its own language, so the ability to translate and interpret—without losing or altering the data’s original meaning—becomes essential. We find solutions in quality data and addressing all three dimensions: Accurate, complete, and timely.
With people and processes, the challenge is overcoming engrained industry attitudes and practices. It is not about performing an audit, arguing over accessorials, or getting tracking data. Instead, it’s about re-approaching the problem, starting with a complete, up-to-date picture of performance, based on trusted data.
Q: How are initiatives and goals affected?
A: Without trust in your day-to-day business intelligence, data, and analytics, and the proper approach, processes, and tools, initiatives and goals fail. You need complete confidence in how your transportation operations performed last week—how you are trending, where you failed, how to fix that, what to expect for next week, and the week after.
You should be confident when analyzing performance, and then presenting it to your chief supply chain officer or CFO. All manner of lane, cost and service analysis, landed cost estimates, budget tracking and projections should be a real and accurate picture. And if it’s not, your credibility, reputation, and job could be on the line.
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Q: Many shippers cite hidden costs and visibility as a top challenge. What are the consequences of hidden costs?
A: Simply, you won’t stay on budget. You expend more time and money, hiring staff to do the research, and forensics to uncover where and how those hidden costs are occurring.
We look at three “buckets”: Cash. Cost. Service.
Cash is how, with proper controls and practices, you can turn your supply chain into a bank for the business. This gets to the contractual agreements and payment terms with your carriers and how accessorials, exceptions, invoice disputes, short or delayed payments, and other cash issues are managed. Reliable data and tight processes can prevent errors in the first place, take the emotion out of carrier discussions and allow you to drive favorable payment terms.
Cost is eliminating non-value-added work, leveraging technology in its place, and lowering overall transportation costs. You may have one carrier that is the lowest rate, but consistently delivers late or damaged, provides inaccurate invoices, or incomplete tracking data. All those have a cost to correct. These hidden costs influence other areas, such as supply chain velocity, inventory turn times, and carrying costs. Not to mention cash flow, AR days or days sales outstanding, and other financial measures.
Service is all about how your carrier enhances the customer experience through consistently complete, on time, exception, and damage-free delivery of your goods. Does that carrier’s performance allow you to reduce demurrage, detention, claims, and other waste? Does the shipment tracking data validate carrier performance, meet precise pick-up and delivery windows to meet inventory in-stock goals or fulfillment deadlines? And equally important, is the invoice accurate and timely—and does it match the order?
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Q: What’s the path forward?
A: Don’t compromise on your goals. An effective strategy built on solid, reliable, complete, and accurate transportation performance data is achievable today. As a matter of fact, the correct approach, tools, and processes, the value of data with integrity and quality can ripple five-fold or more through the supply chain.
Don’t be held hostage to deeply ingrained attitudes of “this is how it’s always been done”. Instead, strive to be collaborative versus confrontational with carriers. With the systems and processes we’ve built at RateLinx, you can trust your data, find meaningful cost savings, and monitor and measure freight spend performance in ways that help the company reach goals not just for transportation, but strategic profit improvement. And make your carriers better partners.
When you deliver on the opportunity of truly strategic freight spend management, it can open up other avenues of improvement and competitive advantages you never thought possible.
And most importantly, from a professional reputation perspective, it gives your strategies credibility and legitimacy and validates trust in your skills and decision making. That is about as powerful an attribute as any logistics professional can ask for to drive business—not to mention career—success.