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AdexinBlogHow effective carrier management improves logistics operations?

How effective carrier management improves logistics operations?

Jan 9, 2024
5 min

Summary

In modern logistics, transportation, and the supply chain, there is no room for gaps in planning, scheduling carriers, or poor route forecasting. Everything should be as accurate as possible to ensure overall efficiency.  Butif sometimes it isn't possible to ensure a certain level of efficiency due to lack of proper skills in place or external events, you should still be able to act on ongoing events to provide fast troubleshooting. And even if you're a small or medium-sized business, you should be cautious in your business management like larger companies.

In this article, we explain a bit more about how to manage your carriers and what impact it can have on overall operations. Here, you'll be able to gain more substantial knowledge about certain operations in transportation that are interconnected with all-over operations in the supply chain and logistics. We reveal information about COTS solutions and custom software development as one of the two ways to gain control over your carriers.

What is carrier management?

At the very beginning, it's crucial to give you a sneak peek into what carrier management is all about. While it might be obvious to some readers, here we explain what carrier management is and determine the key features that this statement should combine. 

Explaining briefly what carrier management entails, we can directly refer to the complex process of carefully selecting, contracting and supervising carriers to ensure a smooth and efficient transportation system. This comprehensive approach includes the meticulous evaluation and selection of carriers, contracting, performance monitoring, and problem-solving. We emphasize that the ultimate goal is establishing a network of reliable carriers capable of meeting transportation needs at a reasonable cost structure.

Yes, costs play a crucial role. Therefore, carrier management is often based on a software solution featuring many functions that can save money in an organization. Here are some selected functionalities for carrier management software:

Carrier Records

A complex list that includes unique carriers that are the solution to your shipping planning.

Carrier Services

Various shipping services and modes (e.g., intermodal transport, last-mile delivery, just-in-time delivery, or any sea, air, or ground shipping).

Tracking Number Generation

Creating tracking numbers and digital Proof of Delivery to allow all stakeholders to keep an eye on shipments.

Carrier Rates

An entire rates overview for your specific carrier contract and customer rates (rates that reflect what you charge customers).

Accessorial Charges

The system can automatically add required charges to the shipment of your choice (e.g., fuel surcharges).

Routing Guide

The system can measure geographical data that describes the area for which each service is provided.

Transit Times

Functionality is connected to the Tracking Number and indicates the estimated delivery time (ETA). It is typically differentiated by service level and geographical location.

What are the carrier management processes?

Despite carrier management being based on a software solution, an external process is connected to managing carriers. Here are the four main pillars of the carrier management process:

Selection and qualification

At this point, you need to identify transportation needs and conduct market research. Later, a process for evaluating carrier capabilities and establishing selection criteria needs to be implemented.

Contracting and negotiation

Here, you define contract objectives with carriers. Deploying comprehensive terms and conditions, negotiating prices and commitments, and obtaining legal approval are crucial.

Performance management

During the entire process, you need to monitor carrier performance. There is a huge demand for resolving problems quickly, conducting regular reviews, and using data for continuous improvement.

Relationship management and compliance

In any business, it is important to build positive relationships with carriers through effective communication. You must dive into conflict resolution and collaboration, ensure regulatory compliance, manage risks, and conduct regular audits for continuous improvement.

How does a carrier management system help your business?

Carrier management systems can deliver many advantages to your operations. We have prepared those that will have a tangible conversion for your business in the most positive manner.

Cost savings

Optimize transportation costs by selecting competitive carriers, negotiating favorable rates, and improving overall operational efficiency.

Improved service quality and reliability

Selecting carriers with a proven track record leads to increased customer satisfaction. You can also reduce transportation times and improve on-time delivery.

Improved operational efficiency

Streamlining transportation processes can help you reduce delays and minimize errors through effective carrier management. As a result, you'll have smoother operations and increased productivity.

Risk mitigation and compliance

Assessing carriers' compliance with regulations and safety standards helps mitigate risks to operations. It is where you'll reduce the likelihood of disruptions or compliance issues.

Better supplier relationships

Fostering positive relationships with carriers leads to better collaboration. Here, you can get better communication and greater trust. Frankly speaking, it will result in better service levels and long-term partnerships.

Greater flexibility and scalability

Adapting to changing transportation needs and market conditions allows companies to scale their operations. Everything is based on fluctuations in demand, so expand into new regions and capitalize on growth opportunities.

Improved visibility and control

Carrier management systems provide insight into transportation operations. Here, you enable proactive decision-making and rapid response to issues through monitoring.

What is the best-advanced traffic management system

As mentioned in the beginning, there are two ways of carrier management based on software. You can use a commercial off-the-shelf software (COTS) solution or choose custom software development services. In both cases, you get advantages that can help you manage your business.

Nevertheless, custom software development is more suitable for providing the most out of the system to support your operations. You can access many customized features and rely on experts' knowledge to guide you through each development stage. They will also be able to provide you with ongoing assistance for future development and troubleshooting.

The benefits of custom software development services for carrier management seem obvious. However, there is also one extra functionality that often isn't included in COTS solutions. We're talking about a traffic management system built into carrier management software. We outlined the benefits of a traffic management system built into a carrier management solution:

Effective planning

Traffic management facilitates efficient planning by coordinating and monitoring transportation modes and services. It provides optimized routes and, of course, minimizes delays and associated costs.

Real-time decision-making

Integration of traffic telematics systems enables real-time decision-making. These systems provide data on vehicle movement characteristics such as position, speed, and acceleration. It can enable rapid adjustments to optimize transportation resources.

Improved coordination

With traffic management built into carrier management software, companies can seamlessly coordinate transportation activities. It ensures efficient use of available resources while meeting customer requirements and minimizing overall supply chain disruption.

Optimized traffic flow

Traffic management goes beyond carrier operations to include managing traffic flow on highways. This optimization ensures adequate road space and operational speed. In that way, the solution is contributing to overall efficiency and safety.

Cost minimization

Effective traffic management in carrier operations minimizes costs associated with delays and inefficient use of transportation resources. Cost reduction contributes to increased competitiveness in the market.

Optimized global forwarding freight

Undoubtedly, by using carrier management, you can also benefit from optimizing global forwarding. It is often handled within intermodal transportation modes. Within carrier management software, you can choose the type of transportation that is most suitable for your customers.

Carrier management software moves under one roof. Mostly, it is a solution based on the platform. Here are the benefits of using freight forwarding with a carrier management system:

Global shipping expertise

Freight forwarders navigate complex global shipping regulations. Here, you can ensure compliance and minimize the risk of costly errors associated with different regulations.

Carrier network

Well-established relationships with carriers worldwide allow freight forwarders to offer cost-effective and efficient transportation solutions using a variety of modes.

Cost savings

As cost management is most painful for carriers and shippers, with a platform for carrier management, you can manage forwarders and optimize routes. You can consolidate shipments to minimize unit costs. In that way, they're providing cost-effective and efficient transportation solutions. [1]

Platform benefits

The platform increases shipment visibility with real-time tracking. Here, you can get instant updates and notifications, no matter which mode of transport you have used. It contributes to better decision-making and proactive exception management.

Final takeaway – what have you learned about carrier management?

The carrier management system is a complex solution that can support your business, no matter the size of your company. However, using this system is much easier than choosing the right partner to help your business implement this solution in your organization.

At Adexin, we support transportation companies in supply chain and logistics with the implementation of carrier management systems. By understanding interdependencies across various industries, such as transportation, logistics, and supply chain, we know precisely what kind of results you may expect from carrier management. We listen to your needs as we believe that customer needs must be evaluated to provide you with reliable support. Contact us today to see how we can support your business.

References:

[1] Digital logistics: Technology race gathers momentum; Retrieved from https://www.mckinsey.com/capabilities/operations/our-insights/digital-logistics-technology-race-gathers-momentum

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FAQ

What is the article's focus related to modern logistics, transportation, and supply chain management?

The article mainly focuses on the importance of accurate planning, carrier scheduling, and route forecasting in modern logistics. It emphasizes the need for efficiency in small and medium-sized companies.

What key features the article reveals in connection with carrier management?

The article explains carrier management as a complex process of selecting, contracting, and supervising carriers. Key features include careful evaluation of carriers, contracting, performance monitoring, and troubleshooting to establish a reliable network of carriers at a reasonable cost.

How does carrier management software contribute to cost savings for an organization?

Carrier management software contributes to cost savings by optimizing transportation costs by selecting competitive carriers, negotiating favorable rates, and generally improving operational efficiency.

What are the four main pillars of the carrier management process mentioned in the article?

The four main pillars of the carrier management process are selection and qualification, contracting and negotiation, performance management, relationship management and compliance.

What benefits does a traffic management system bring to carrier management, and how does it contribute to overall efficiency and cost minimization?

A traffic management system integrated with carrier management software brings benefits such as efficient planning, real-time decision-making, better coordination, optimized traffic flow, and cost minimization. It contributes to the overall efficiency and safety of transportation operations.

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