Transportation Providers - Ways to Build Bridges Blog PostLike so many other businesses, the trucking and carrier industries have fallen victim to difficult economic times.  The reluctance of banks to extend loans coupled with rising fuel expenses and increased service demand from customers has backed many transportation providers into a corner.  Over the last several years we have seen the results with transportation companies consolidating or closing their doors altogether. Motor carriers going out of business just tightens capacity and in turn drives up pricing.

In your supply chain, transportation providers play such an integral role in the overall efficiency of all businesses involved that any difficulties with carriers sends a ripple through the entire operation.

Putting the Squeeze on Transportation Procurement

To keep their own businesses going, manufacturers, distributors and retailers are all applying even more pressure on transportation providers to literally “shape up or ship out.”  Unfortunately simply giving an ultimatum could seriously hurt your industry in the long run as your transportation provider options dwindle.

Likewise, businesses should not leave the transportation decisions up to their individual warehouses, profit centers or any decentralized location.  If you are not leveraging your buying and negotiating power with your transportation providers, you are leaving money on the table.

Before completely cutting your transportation providers off, consider building a bridge that can benefit your entire supply chain:

  1. Look at your common goals.  All participants in the supply chain will have similar goals in regards to quality, customer service and others.  Note the goals where you and your provider run parallel. Give them more business in lanes where they have strength in exchange for city pairs where neither party is benefiting.
  2. Set expectations.  There should be clear understanding of what you expect from a transportation company.  This should include arriving on time, quality, paper work, shipment tracking and more.
  3. Always measure for success.  Determine key performance metrics that should be used for all carriers including trucking, ocean, rail and air freight.  Set realistic goals for these measurements that the providers must meet in order to retain the business.
  4. Look for optimization opportunities.  Often there are ways to reduce freight expenses by consolidating shipments or modal shifts.  Discuss ways to reduce expenses across the board.
  5. Work out quality or efficiency issues.  Bring everything out on the table including the problems that have been experienced over the last year or so.  Have an open dialog on these issues and commit to improvements.

Above all, your transportation carriers want long term partnerships with your business feeding your entire supply chain; and admit it, you want those partnerships too!  Solid partnerships will benefit everyone in the long run, and help all businesses to ride out tough economic times.  Download the free white paper: Transportation Procurement: 7 Steps to Bottom Line Results for more insights on building bridges with your transportation providers.

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