To Save Money on Freight, Let’s Focus on Good Data rather than Big Data
March 10, 2013
March 10, 2013
“Big Data” has become one of the more popular business expressions over the past couple of years. This commonly refers to a collection of data sets so large and complex that it becomes difficult to process using on-hand database management tools or traditional data processing applications. While this is a legitimate concern for some companies, possessing good freight data is a key issue for many others.
In our work with shippers and carriers, we find that having good quality data, data that can be used to make fact-based decisions that help companies improve their profitability is still a major issue, an issue far more important than big data. In this blog I will address two issues. First, what data does a shipper need to run an effective freight transportation operation? Second, I will highlight how a business benefits from having “Good (freight transportation) Data.”
GOOD FREIGHT DATA – THE ESSENTIALS
For a shipper to manage an effective freight operation, the following are the key data files required.
a) Minimum One Year of Detailed Shipping Data
To be useful, the file must capture the following fields:
• Origin city/state/province/postal code
• Destination city/state/province/postal code
• Shipment pickup/delivery date
• Service (e.g. parcel, LTL, expedited, truckload – road, truckload – intermodal, carload, ocean, air freight etc.)
• Linehaul rate
• Fuel surcharge
• Accessorial charge
• Unit of shipping (e.g. pallets, drums, boxes)
• Shipment weight
• Shipment dimensions
• Heated service of refrigeration required
b) Complete files on all major carriers
A complete file would contain the following:
• Rate quotes with linehaul, fuel and other surcharges
• Carrier service map
• Services provided
• Key contact people (e.g. sales, dispatch, pricing, executive etc.), e mail addresses and telephone numbers at major locations
• Carrier service standards
• Operating authorities and licenses
• Safety record
• Equipment profile (e.g. tractors, trailers, terminals etc.)
• Smartway certificate
• List of cross-border certificates (C-TPAT, FAST etc.)
• Computer system
• Web portal with access code/password
c) Routing Guides
These guides list the primary and backup modes and carriers on all lanes of traffic. They dictate to shipping personnel the best carrier by lane in terms of service, coverage and price.
d) Transportation Budget Data
The budget contains the following elements for a 12 month period:
• Total freight costs
• Freight costs by division and/or plant
• Freight costs by mode (e.g. truckload, LTL, intermodal, parcel, carload, air freight, ocean, air freight, expedited)
• Same data – last 12 months
• Monthly variance report – comparing actuals to budget to last year
e) Transportation Planning Data
Timely, accurate shipment data allows companies to identify opportunities to consolidate shipments (e.g. parcels into LTL shipments, LTL shipments into truckloads) and to utilize the most cost effective mode (e.g. carload, intermodal, ocean).
f) Transportation Billing Data
These flies, sorted by carrier, by month, contain the carrier invoices with the attached bills and PODs.
g) Scorecards/Compliance Reports
This data allows a shipper to manage their freight operations. These are the key components.
• On-time service reports by carrier by lane
• Overage, shortage and damaged shipment reports by carrier
• Exception reports – missed pickups, load refusals, missed deliveries
• Billing accuracy reports/Carrier rate error reports
• Freight costs as a percent of revenue by product, for the business as a whole
• Freight costs by mode as a percent of total freight costs
This data should be kept for a minimum of three years and graphs should be maintained to easily identify trends.
THE VALUE OF GOOD FREIGHT DATA
There are numerous benefits derived from organizing and maintaining high quality freight data. Some of the key benefits are listed below:
Obtain the maximum value from a company’s freight spend/Save money on freight
Quickly identify non-compliance with routing guides and “maverick spend”
React quickly to changes in production and/or sales patterns
Rapidly find capacity during peak or crisis (e.g. weather/strike) periods
Interact expeditiously with non-performing carriers so as to protect the integrity of long-established customer relationships
Optimize productivity and morale of transportation personnel
Identify billing errors and take action with offending carriers to correct them in a timely manner
Maintain good relationships with vendors and carriers
Shippers that don’t have good quality freight data tend to
o overpay for their transportation services
o use higher priced modes and carriers
o ship too frequently
o use the wrong modes
o not meet customer expectations
In other words, poor data results in lazy, unstructured, undisciplined freight practices.
Good data adds dollars to the bottom line; Low quality data reduces profitability.
I am sure there are many more benefits from Good Data that can be added to the list. Can you suggest some?
Dan Goodwill & Associates (www.dantranscon.com) helps shippers optimize the value of their freight programs.
Dan Goodwill, President, Dan Goodwill & Associates Inc. has over 30 years of experience in the logistics and transportation industries in both Canada and the United States. Dan has held executive level positions in the industry including President of Yellow Transportation’s Canada division, President of Clarke Logistics (Canada’s largest Intermodal Marketing Company), General Manager of the Railfast division of TNT and Vice President, Sales & Marketing, TNT Overland Express.
Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. Mr. Goodwill also provides consulting services to transportation and logistics organizations to help them improve their profitability. All posts by Dan Goodwill