In a world where trucking capacity becomes constrained, relationships matter. Managing those relationships strategically, versus tactically, can make a huge difference in the viability and reliability of each company’s supply chain.
The first ingredient to successful supply chain relationship management is having the ability to measure a supply chain partner’s performance. The next is possessing technology that assists with automating processes, thereby diminishing busy work. The third is shared knowledge, for the purposes of openly measuring, managing, and valuing partners. The fourth is the relationships themselves - which providers truly want to build long-lasting, beneficial relationships?
Understanding your supply chain partners’ strengths is the area where you're likely to find mutual benefits. To determine strengths, have measurements in place to understand key performance indicators, like tenders offered, tenders accepted, on-time pickups, on-time deliveries, and any situations where an accepted tender is later rejected. Once those baseline measurements are in place, you may begin to explore mutual opportunities.
Opportunities often manifest themselves as situations where product needs to move, a transportation provider has capacity, and the added traffic will benefit their network. Once you begin to explore these opportunities with your supply chain partners, natural fits will become apparent, that can lend themselves to better overall understanding of capacity levels and the establishment of commitments.
While commitments may not be optimal, they are necessary to ensure supply chain viability when capacity constraints begin to occur. Without solid relationships, joint commitments, and a good understanding of what each supply chain partner values, transportation providers have a tendency to gravitate toward higher-paying freight when capacity becomes constrained.
The way to ensure that your product is picked up and delivered on time is to leverage technology. Measure provider performance and use TMS tendering technology to eliminate personal preference, and foster the business relationship by openly discussing challenges and problems. A relationship based on these fundamental principles builds trust and creates the foundation of mutual success.
Using a TMS to complement your partner relationships can also bring other benefits to your organization; employees who once were consumed with the busy work of dispatch, are now freed to spend time doing more valuable tasks, including analyzing partner performance, working with carriers to compare notes on unexpected changes, and discussing expected flexing of a dynamic supply chain as demand patterns change.
Tim Minnich is President of TransWorks, a subsidiary of Norfolk Southern Corporation
Tim has nearly 30 years’ experience in the transportation industry and has guided TransWorks to become a leader in managing hosted TMS solutions.