For some shippers, data capability and accuracy are becoming as important as service and pricing when differentiating between transportation service providers.
How’s this for a carrier’s nightmare scenario? Your shipper customer keeps a vendor scorecard, and you rank in the top five on both on-time performance and price, but it’s not enough.
In other words, you are in the upper echelon of all the carriers that shipper works with in terms of those two metrics. For decades, those were literally the only two metrics that mattered in freight transportation: service and rates.
American Shipper research into transportation procurement bears that out. Those two metrics were overwhelmingly the key decision-making criteria—in many instances the only criteria—for shippers and logistics companies buying freight capacity.
So what’s changed? The dreaded “D” word.
Data is not only something that shippers are compiling, it’s something they’re using to differentiate between service providers.
At Amber Road’s Evolve user conference in mid-May, Josh Skeen, senior director of global logistics at NCR Corp., described his company’s sophisticated approach to total landed cost visibility. Essentially, NCR, which manufactures a range of point-of-sale and ATM machines, has created a flexible database that lets it determine the costs of all the goods it ships across its complex global supply chain.
Skeen put up one slide showing a carrier that would have ordinarily made the grade as a transportation vendor, but was excluded because it could not provide accurate visibility data. He described how this data-driven approach even allowed NCR to realize the carrier wasn’t up to the task in terms of providing data back to the company.
When NCR scanned through its shipments, it only found a fraction of the volume that was supposed to be committed to that carrier. Yet the company knew, by other means, that those cargoes had indeed been handled by the carrier. So the carrier had performed well, and the price was right, but it wasn’t able to convey key data points back to NCR in the way that the company needed to effectively measure it against competing carriers.
“We kicked out a high-performing carrier with good price because their underlying data was weak,” Skeen said. “They weren’t able to convey the volume moving in their network accurately to us.”
In many ways, this is a watershed moment for supply chain data. And it’s incumbent upon carriers and logistics providers to keep up with shippers, who are realizing the potency of effective data initiatives. Logistics software providers are driving these needs by putting in the hands of shippers powerful tools to manage and utilize data.
Another Amber Road customer, Abercrombie & Fitch, described a similar stance with its suppliers at the conference.
Kevin Snelling, senior transportation analyst at the clothing retailer, said A&F compiles monthly and weekly event scorecards for service providers on data timeliness and completeness.
“This goes into our bid process,” he said. “We look at their EDI scores. They may have great performance but their visibility is poor. We need both of those. It’s a two-headed dragon.”
And earlier in May, there were complementary stories told at BluJay Solutions’ user conference, Soar.
The broader message is that the terms of engagement for carriers in all modes have changed when it comes to visibility. Expecting shippers to log on to carrier-specific portals, or to rely on batched visibility information, is becoming an increasingly outdated approach.
On the domestic side, third-party visibility providers like MacroPoint and FourKites are changing the ways carriers interact with their customers. Those tools are steadily being incorporated into transportation management software, and the tracking systems of freight brokerages.
On the international side, shipper expectations surrounding visibility data are growing every day. That makes it incumbent on carriers to convey more real-time data to cargo owners and their 3PLs, and not in a closed, one-to-one manner as has often existed in the past.
Application programming interfaces (APIs) are one way this data is being conveyed more quickly and via hubs that carriers and shippers can tap into. The logistics technology company project44, for example, provides templated APIs for carriers in all modes to connect with brokers, forwarders or shippers.
These outlets will be critical as expectations rise further. Data cuts both ways. It illuminates the best paths for freight, but it also shines a light on processes or vendors that aren’t up to the task of providing that crucial information along with excellent service.
To learn more about NCR and Abercrombie + Fitch’s use of automation in their supply chains, register for the free American Shipper webinar “How Digitization Impacts the End-to-End Supply Chain” at 2 p.m. July 20.