Dan Cicerchi | Descartes MacroPoint
Despite the immediate benefits to the supply chain, there is still a lack of knowledge about the competitive advantages of real-time freight visibility. Below are four reasons why indicators such as freight status and location will become even more essential in the coming year – and how technology can help close the gap.
As the supply chain becomes exponentially more complicated the importance of freight visibility increases due to its innate ability to provide real-time insight into the location and status of freight. A recent benchmark study by American Shipper called A Clear View of Supply Chain asked key supply chain decision-makers which transportation and logistics challenges are most critical to their enterprises. Underscoring the rising importance of freight visibility, nearly three-fourths of respondents ranked visibility second only to cost-reduction.
In 2018 and beyond, those who prioritize freight visibility will have a competitive advantage over those who don’t. The benefits are plenty as showcased in the study1 where participants identified agility and risk reduction as the biggest advantages. Here are four reasons why freight visibility should be a top priority in 2018:
1) Late shipment consequences are becoming more severe.
American Shipper’s study on supply chain technology also found that 54 percent of 3PLs said they either lost business or did not know if they lost business due to their visibility capabilities. A late shipment or unreported delay can have a ripple effect on the productivity of a supply chain. For example, a factory might need to idle or ramp up a production line accordingly; a retailer may have to work around the lack of inventory on store shelves; or a distribution operation may need to adjust staffing on its loading docks to account for both unproductive time and the need for personnel when a shipment does finally arrive.
In all of these cases, what you don’t know can hurt you (and others in your supply chain). To avoid wasting valuable time and money on costly disruptions, brokers and carriers should constantly monitor the on-time delivery of goods. If this is not done, the process slows down significantly and can result in expensive consequences. Freight tracking technology provides real-time visibility and delivers updates on the constant movement of freight, minimizing surprises in the supply chain that can cause serious headaches for all involved.
2) Freight visibility isn’t just a nice-to-have option. It’s a business requirement.
The way the market views freight visibility has evolved significantly over the past few years. Previously, simple track-and-trace methods were seen as an adequate method of gaining supply chain insight. This is no longer the case. As a way to calm the chaos manufacturers, wholesalers, retailers, and other shippers now require 100 percent visibility into freight status and location. Brokers and 3PLs have embraced freight visibility in a large way. According to the study, 90 percent believe visibility is a core service offering, and that shippers are using visibility capabilities as a metric when choosing service providers2.
As the demand for increased shipment visibility grows, it is also driving requirements for accessing information about current shipment status. These status checks include arrivals and departures at pick-up and destination locations, and in-transit updates backed by concrete GPS-based positioning. Systems need to provide more frequent and detailed updates automatically on shipment status through a single point of integration, regardless of censor-based devices in use, to address visibility effectively.
As a way to calm the chaos manufacturers, wholesalers, retailers, and other shippers now require 100 percent visibility into freight status and location.
3) Companies require greater insight into disruptive and costly late and off-schedule shipments.
Today, shippers actually want more than 100 percent visibility – they are going a step further and requesting specific visibility on off-schedule and late shipments that can have a serious impact on operations. Using predictive analytics and managing shipments by exception helps to drive proactive management practices that then lead to more informed decisions, which help boost productivity and efficiency across the supply chain.
A recent analysis of shipments using the Descartes MacroPoint freight-tracking system found that 12.1 percent arrived after the originally scheduled time3. This would categorize more than 10 percent of shipments as “off schedule” or “significantly delinquent.” A predictive analytics capability would allow shippers to manage issues by exception only, not the entirety of their shipments, saving highly valuable management time.
4) Greater visibility helps uncover hidden and/or new freight hauling opportunities.
If you consider that, in North America, more than 70 percent of cargo – more than 10.5 billion tons of freight annually4 – is hauled by trucks, the ability to meet freight visibility requirements from a growing number of companies can mean the difference between securing their business or losing out on a significant number of freight hauling opportunities.
As confirmed by the American Shipper study in point 2 above, businesses care about the advancements of visibility and how they can put them into practice, making their supply chain even more efficient.
The supply chain is an extensive and complex network, and growing more so every year. Today, 71 percent of shippers use carriers’ tools or rely on outside software providers for visibility information, but only six percent of shippers have real time visibility due to EDI latency and the inability of those systems to provide up-to-the-minute information5. Now is the time to put true freight visibility to practice. It’s a critical way to reap the benefits of real-time insight, which can increase productivity and save costs across the supply chain for all.
Dan Cicerchi is Vice President with Descartes MacroPoint in Cleveland, OH.
1 A Clear View of Supply Chain, Visibility Benchmark Study (2016), American Shipper, p.4.
2 A Clear View of Supply Chain, p.15.
3 MacroPoint, 2016.
4 American Trucking Association, Industry Data
5 A Clear View of Supply Chain Study, p.10.