We've talked a lot in recent blogs and whitepapers about the impact that constrained capacity is having on shipper-carrier relations.
Regardless of the causes—the driver shortage, an economic boom, or the tightening regulatory environment—the effects are the same: prices go up and the need to have a competitive edge shifts from the carrier to the shipper.
For the shipper, that essentially means becoming a Shipper of Choice, a topic we've explored in our recent white paper 'Becoming a Shipper of Choice'.
This time around we'd like to offer some tips on ways you can measure your success. One of these is to benchmark your own operation in the areas that interface with your carrier partners.
Once you have established a set of parameters that you want to meet in each of these areas, it's simply a matter of regularly taking stock of your progress towards these goals. This can be done through internal review meetings as well as regular meetings with the carriers themselves to seek their opinion and feedback on how you are doing as a customer.
So, how do you go about setting objectives?
Enumarate the departments and processes
The first step is to enumerate the departments and processes that interface with or affect the carrier. For example, this would include accounts payable, sales, operations planning, senior management, dispatch, warehouse, inventory and so on, depending, of course, on how your company is structured and whether you manufacture or simply distribute product.
Bring in your carriers
It's at this point that many recommend you bring in your carrier(s) [1]. If your objective is to become a Shipper of Choice, then letting your partners in on the improvement process early on is a good strategy. Perhaps they can identify another area where your two organizations interact that you missed; it could be something as simple as the security guard at the gate who their drivers talk to at every visit to your facility.
Set your objectives
And here's where you can enlist their help to set your objectives as well. Not every carrier will have an identical list, but you can bet they'll be similar.
For example, Werner Enterprises has developed a Yield Test that can be used to identify how carrier-friendly you are [2]. It consists of 21 questions, each scored on a one to 10 scale, that help you determine how easy it is for your carriers to do business with your company. The test will give you an idea of how much it costs the carrier to serve your account.
Another example of the kinds of questions to ask can be found here. [3].
Complete the questionnaire
Both your staff and the carrier's should complete the questionnaire, once you've determined your questions, and then you have a benchmark score for measuring your improvement.
Schedule regular reviews
Thank schedule regular reviews with your staff and carriers. The interval between check-ups should be determined by how much work you need to do. If you are already in the Shipper of Choice bracket, with good scores across the board, then you may need only semi-annual reviews.
Revisit the process & progress
But if you have a lot of work to do, then regularly revisiting the progress being made will ensure that all involved—your staff and the carriers you work with—know you are serious about changing and improving.
In conclusion, be prepared to invest in the process. It will take time, effort and probably some capital outlay if your processes or facilities are not quite up to par.
With the amount of emphasis being placed on developing strong partnerships with carriers, even shippers who have cemented those relationships need to keep the deal sweet by having regular reviews. Even if these meetings turn into friendly chances to discuss business in general because there are no nagging problems to work out, they will still be beneficial in the long run.
The intangible value of cultivating and nurturing your carrier partners as integral to your business cannot be underestimated. Taking the time to make this a formal process, with benchmarks and regular reviews will pay off in goodwill, easy relations and ultimately better rates for your freight.
References
1 - Becoming a Shipper of Choice, How to thrive in the capacity crunch, WHAT IS A SHIPPER OF CHOICE? | eBook 1 by LeanLogistics
2 - 2015 FOOD SHIPPERS OF AMERICA Conference presentation: "Are you really being a shipper of choice", by DEREK LEATHERS PRESIDENT & COO, WERNER ENTERPRISES. http://www.foodshippersofamerica.org/ResourceCenter/Presentations/2015/Are-you-Really-Being-A-Shipper-of-Choice.pdf
3 - How to Become Your Carrier's 'Shipper of Choice', By: SupplyChainBrainOctober 09, 2014