Planning and managing efficient supply chain networks and transportation services requires careful attention to detail, especially when working on supply chain visibility. Maintaining high levels of ultimate logistics visibility and insight, backed by real-world data and statistics and founded on real-time customized data, is essential to keeping the industry moving forward in a post-pandemic world.
As reported by GlobeNewswire, “the global transportation management system market size is expected to reach $21.08 billion by 2027, rising at a market growth of 17.0% CAGR during the forecast period.” With projected growth like this and current market demands still at unprecedented levels, it is no wonder there has been such a renewed focus on supply chain visibility and logistics.
As more supply chain managers begin to look ahead past current disruptions and seriously consider future trends, the answer to what capacity is in supply chain logistics becomes all the more important. Solutions such as these are closely tied to improved visibility and transparency, as one cannot exist without the other. For shippers and transporters dealing with refrigerated goods manufacturers and distributors, clear visibility throughout the supply chain is essential not just in 2022 but beyond. Learning to lead by setting an excellent example for others in the industry is critical for becoming a dominating presence in the modern-day supply chain network.
What Is Supply Chain Visibility?
Visibility throughout the transportation network involves clear insight and access to data and real-time updates about individual loads, orders, trucks, cargo shipments, supply lines, and customer orders. Supply chain visibility involves tracking and monitoring the entire process from manufacturing to distribution to final delivery with local carriers or pre-vetted drivers.
This need for improved visibility into supply chain logistics has long been a sticking point for many shippers and logistic managers. According to Supply Chain Management Review, “For years, the industry has felt that the return on investment (ROI) for these improvements was lengthy and unattainable. The value of a highly-visible supply chain, however, is undeniable and necessary for smooth operations. Visibility not only allows a company to connect with their partners and consumers, but it also provides a sustainable strategy to build trust, drive improvements, lower risk, and react much faster and more effectively should any disruptions occur.” This improved response and problem-solving benefit make enhanced supply chain visibility and logistics visibility crucial for the modern transportation and shipping industry.
Shipping logistics and truck driving during COVID have brought to light new challenges and issues that have gone undetected for far too long. Clear visibility means faster and more efficient processes overall for every machine component known as the contemporary supply chain.
The High Costs of Poor Visibility
While visibility is critical to ongoing growth and recovery in the modern supply chain market, the cost of poor supply chain visibility can be even more impactful. This positive movement benefits everything from efficient supply chain capacity planning to good collaboration with third-party providers. A lack of end-to-end visibility can cost shippers in many ways, including the following:
1. Limited Strategic Value
The ability to plan and be strategic with short- and long-term goals within the company and the network decreases without transparent practices of visibility supply chain management. When supply chain visibility falters, all front and back office procedures’ strategic value and policies fall. This can set off a chain reaction of disruptions, deviations, and issues that affect the entire process in a truly negative way. These effects can impact the supply chain by increasing operational costs and expenses while reducing profits and income across the board.
2. Inability to Plan Transportation Procurement
A large part of transportation and shipping logistics is finding qualified truck drivers and carriers to transport loads. Poor supply chain visibility limits access and insight into quality carriers and reduces the pool of available vendors and 3PLs that can be called upon when a need arises. Transportation procurement and access to pre-vetted providers becomes nearly impossible without visibility into supply chain logistics and third-party availability. Hampered by a lack of data and insight, shippers and transportation managers will struggle to procure reliable and affordable transportation services.
3. Limited Ability to Respond When Things Go Wrong
Despite all the best planning and attempts to keep things moving smoothly, things will sometimes go wrong. Disruptions arise, delays occur, and deviations creep up into the logistical processes and cause issues throughout the supply chain. Without good supply chain visibility and clear insight, it becomes more challenging to respond to these issues when they arise—longer response times, less-than-stellar reactions, and poor decisions all impact logistical responsiveness. Without good insight and proper supply chain capacity planning, management will struggle to overcome these obstacles effectively, where insights from a supply chain expert can make a huge impact overall.
4. Always Reactive, Never Proactive
Another downside to a shipping and logistics company operating with less-than-stellar supply chain visibility is its impact on predictive planning and forward growth. When a company is working with limited insight and does not have reliable access to real-time data and insights into the supply chain, it puts them in a reactive rather than proactive position.
Issues often only get noted and addressed once they have already happened, rather than stakeholders taking informed steps to avoid them in the first place. Answering the question, “What is supply chain visibility?” will make it easier for them to keep a proactive perspective. Management practices can be significantly improved, and proactive measures will help enhance end-to-end logistics and planning.
5. Poor Control Over Landed Transportation Spend
Truckload shipments and landed transportation options are still among the most commonly used options for freight transportation today. It becomes more difficult to track, monitor, and control transportation spending and freight costs. Poor supply chain visibility can cost shipping companies a lot of money, decreasing control and management of transportation costs overall.
Tracking and monitoring freight spending and transportation costs decreases when shippers do not access up-to-date data and real-time insights into transportation spending. The resulting gap leads to higher costs and operational fees for all transportation modes and loads.
6. The Risks and Costs of Spoilage for Reefer and Frozen Freight
One unique issue that faces transportation companies specializing in reefer truck driver services and temperature-sensitive cargo is the risk of spoilage and load loss. Slight changes in temperature parameters and cargo conditions can ruin entire loads and cost shippers a great deal in lost profits and fees. A lack of supply chain visibility and poor end-to-end transparency can cost shippers, refrigerated goods manufacturers, and distributors a significant amount of money.
Spoiled and damaged loads, lost livestock, lost cargo, and other damages can add up quickly, not just in the lost value of the cargo but in the fees and penalties that come from failed deliveries. The inability to control and monitor load status and respond to issues and concerts can quickly happen with frozen freight transportation.
What Is Capacity in Supply Chain Management?
Understanding the balance between capacity and overall supply chain logistics and management is critical to forwarding growth and continued recovery of the supply chain network overall. Capacity procurement remains a vital part of logistical management and planning and cannot go unaddressed as logistics visibility is directly connected to supply chain management practices.
At the most basic level, capacity planning and supply chain management refer to the balance of loads and the current ability to generate output and keep loads moving for short- and long-term time frames. Capacity planning requires constant tweaking, insight, adjustment, and planning to respond to changing markets, customer habits, and industry trends. With the right 3PL technology and digital insights from a freight brokerage provider., this all becomes much more attainable.
Poor supply chain visibility can make the simple act of finding capacity much more complex and costly. The costs of freight transportation and accommodation procurement can vary depending on whether it’s a contract or spot arrangement, the current fuel rates, and the supply chain bottlenecks and backlogs affecting shipping lines.
Proper management and data-backed supply chain capacity planning can help shippers identify some of the leading causes of limited capacity more quickly so they can be addressed and responded to effectively. These standard capacity issues include:
- Labor shortage fueled by wage debates as well as decreases in new drivers.
- Higher e-commerce demand and poor onboarding of new technology to meet needs.
- Higher fuel costs and other increases in fees and surcharges across the board.
- Uncertainty over Russia and other areas of political unrest around the world.
- Changing customer buying habits is complicated by supply chain visibility issues.
- Limited raw materials for new trucks and trailers, such as semiconductor shortage.
- Pent-up demand and economic stimulation combined for recent peak driving seasons.
Overcoming issues with capacity management and driver logistics are just some things that improved visibility supply chain management can provide. With continued growth in e-commerce and online logistics, supply chain capacity can become more easily managed and dealt with, even in volatile market conditions.
Why Visibility Solves the Issue of Finding and Managing Capacity
Finding and managing capacity can be an ongoing struggle for supply chain managers, even in the best of times. Balancing rates and fees with sales and collaborative profits requires a high level of quality and directed supply chain visibility and insight. As noted on March 14, 2022, by Todd Maiden of FreightWaves, “Spot rates have slid off of record highs logged earlier in the year. Spot rates include fuel prices, which are up nearly 40% year-over-year on average so far in 2022.” However, fuel costs are on the uptick and will continue to impact logistics visibility and capacity, regardless of load type or whether spot or contract freight rates are involved.
Understanding capacity in the supply chain and how improved visibility and clarity can improve procurement and overall management requires balancing investments and fees with ROI and profits. Of the most volatile and impactful expenses remain the fluctuating fuel costs seen today. According to the U.S. Energy Information Agency (EIA), released on March 14, 2022, on-highway diesel fuel costs are the highest and lowest in these regions as follows:
- The highest fluctuation region year-over-year is California, with an increase of $2.313, followed closely by the Lower Atlantic region with a rise of $2.200 overall.
- The lowest fluctuation year-over-year has shown to be the Rocky Mountain Region, increasing only $1.690, with the Midwest showing second with only a $1.875 increase.
Still, the overall U.S. on-highway diesel fuel price is currently hitting $3.75 per gallon, but continued global and domestic pressure has the anticipated rates increasing much more, further underscoring the need for complete supply chain visibility. Improved logistics and real-time insights make overcoming these roadblocks and obstacles easier.
The changes seen in supply chain management and logistics in the digitalization age significantly impact how leadership, team members, and drivers respond and adapt to the changes in the market today.
How a Hybrid Brokerage Enables Both Capacity and Visibility
A freight broker can be one of the most integral third-party partnerships shippers have. Today they are intermediaries between a shipper and a freight service provider to help coordinate loads, speed up capacity procurement, and facilitate rate and fee negotiations. Freight brokers can offer valuable insights and boost supply chain visibility by making it easier to attract and retain drivers who specialize in certain types of freight, find each other, and maintain mutually beneficial arrangements.
Working with a hybrid freight broker helps shippers quickly negotiate the ever-changing market and access real-time rates and load capacity availability reports. Cloud-based load boards and job platforms, along with real-time communications and RPF negotiations, are possible with the modern-day hybrid approach to freight brokerage.
Working with a hybrid broker can make it easier to coordinate loads for chilled food manufacturers and any number of other specialty clients and loads, including bulk and oversized loads, hazardous materials, and cargo needing specialized equipment and transportation services. FInding a hybrid freight broker to partner with will also open the doors to many other excellent benefits that make it easier to overcome capacity crunches and shortages, including the following.
1. Access to More Market Data to Understand What Transportation Is Worth
The quality of the data utilized within daily routine processes and decision-making protocols is vital to keeping transportation services profitable and competitive. Knowing what services are worth and what going rates are can make it easier for management to keep profits high and costs low. Superior insight and reliable supply chain visibility come easily with the right broker partnership. They have the tools and technology needed to secure the best rates and fees and keep profits high. Improved logistics visibility is possible with insights from freight brokers.
2. Increased Use of Mid-Market Drivers to Source Capacity in Tight Markets
Specialized carriers and collaborative partnerships can sometimes handle specialty loads or compensate for current market trends and disruptions. Working with a freight broker can help streamline the process by providing direct access lines to mid-market drivers who can quickly, easily, and reliably fill in that capacity need. Overall supply chain visibility and expanding access to dedicated freight shipping service providers and urgent pickup drivers are critical for shippers. Hybrid brokers can make supply chain capacity planning a lot less stressful from start to finish.
3. Access to a Pre-Vetted, Qualified Group of Carriers
Many logistics management teams and shippers waste time and money searching through scrolling lists of possible carriers and drivers. Sifting through the questionable results and possibilities takes valuable time and money to secure actual loads and focus on profitable partnerships. Brokers can enhance supply chain visibility and help shippers access pre-vetted carriers groups who are ready and able to handle any specialty and dedicated loads, including those from chilled food manufacturers and other reefer-related sources.
4. Options to Use Owned Assets for Last-Minute, Expedited Freight Needs
The organization and insight provided by hybrid brokers who understand freight transportation can help shippers handle last-minute orders and delivery on time and in full. Improving end-to-end supply chain visibility with the insight brokers can help shippers take advantage and fully utilize the assets and resources available to them right from the start. At the heart of understanding supply chain visibility management lies the need to embrace available assets that are already on hand and quickly tapped into with the proper guidance and direction.
5. Less Stress in Managing Freight Payments to Carriers
Payment logistics and trucking salaries have always been sticking points for shippers. With the continued pressure of the volatile market still felt today, freight payment logistics remains a critical focal point. Improving supply chain visibility with a brokerage partnership can speed up the essential processes with invoicing, payment tracking, and ROI estimates. As they improve overall visibility, supply chain management can improve relationships to overcome driver shortages in the industry and properly manage payments and billing protocols in the network.
6. Improved Rates Through High-Quality Driver Relationships Where Drivers Drive With Dignity
Supply chain capacity planning often comes down to planning and negotiating arrangements that can be mutually beneficial for shippers and carriers alike. Drivers work with companies that allow them to maximize payments, set their schedules, and manage their routes and loads without excessive micromanaging. Improved relationships with high-quality drivers allow shippers to offer better rates to drivers and better services to customers. This win-win situation is possible with adequate supply chain visibility and transparency.
7. Better Control Over Freight Spend Through Proactive Carrier Management
Taking a proactive approach is always ideal when dealing with the intricacies of carrier management and shipping logistics. With improved supply chain visibility and insights, freight spending and related fees become more manageable. Shippers who consider both short and long-term management needs can collaborate with carrier partners more effectively. Freight brokers simplify the process; whether the loads are from refrigerated goods manufacturers and distributors or need other specialized handling and transport accommodation, freight brokers streamline the process with supply chain visibility.
8. Reduced Confusion Through Collaborative Resources
Confusion and miscommunications with the internal logistics and resource management protocols can lead to costly mistakes and poor decisions. Visibility into supply chain logistics and a collaborative point of contact for all team members allows for easier management of resources. It improves the overall efficiency of the supply chain as a whole. Confusion and misunderstanding decrease, miscommunications are easily avoided, and supply chain visibility improves for shippers, drivers, and customers alike with the insight and collaborative efforts provided by hybrid freight brokers and partners.
9. Fewer Accessorials by Prioritizing Performance and Visibility Throughout All Transactions
Logistics visibility becomes stronger by improving performance and controlling accessorial charges for all of the various shipping processes, including monitoring accessorials and surcharges. Every shipment, communication, and interaction must focus on productivity for maximum efficiency. Reducing mundane tasks and making better use of available resources and person-hours will allow transportation and logistics managers to avoid accessorials and surcharges. All of this is possible with enhanced supply chain visibility and scalability, provided by skilled and experienced hybrid freight brokerage teams.
10. Digital Management Backed by Analytics to Maintain Quality of Transportation and On-Time, In-Full Pick-ups and Deliveries
The final benefit of maintaining clear and complete access to real-time data analytics and supply chain visibility is increased transportation services and delivery completion. The tools, insight, access, analytics, and services that hybrid brokers offer will make it easier for management and team members to fulfill delivery requirements and keep customer experience and satisfaction high. Digital management and insights allow for more accessible supply chain capacity planning and analytical execution throughout the supply chain network.
Gain More Visibility Into Both Transportation Management and Shipping Execution With AMX Logistics
Effectively planning and managing all the various aspects of the modern-day transportation market while also keeping up with current supply chain network trends is critical for continued growth and success. Current customer demands and manufacturing trends require innovative approaches and reliable data and insights, especially when dealing with supply chain visibility and constant market pressures. For all the logistical planning needed, the demand for an approach focused on visibility supply chain management remains a critical first step for everyone within the modern trucking industry.
Maintaining quality logistics visibility and insight, backed by real-world data and statistics, is essential to keeping the industry moving forward. Keeping up supply chain visibility and transparency between management, team members, third-party members, and customers makes it easier to manage the ins and outs of the supply chain network. Establish yourself as one of the good trucking companies that drivers want to partner with and that customers are thrilled to work alongside. Even in the face of economic and supply uncertainties, the right partnerships can make all the difference. Contact AMX Logistics today to get insight,advice, and support when and where you need it.