Without real-time operational analytics to provide that data, meaningful and sustained improvement is unattainable—or at best difficult. So what tools do you have today to collect, aggregate and analyze real time transportation data? Does your system provide the flexibility to keep pace with changing market dynamics? Are you able to perform data drill-downs to support root-cause analysis? Does the system track and support your key performance indicators (KPIs)? Are you able to conduct ‘what if?” analysis in a fast and easy manner and does it provide the ability to benchmark key metrics against industry performance or across regions within your own network?
Our own capability to analyze a wide range of carrier data, comparing lane specific carrier strengths, drove us to the appropriate selection of highly cost-efficient express lanes that reduced expense and enhanced performance. Fundamentally, visibility to data enables the identification of options that might otherwise remain hidden along with the timely recognition of cost and performance trends. In fact, in any serious process improvement initiative at Avnet—be that in transportation or elsewhere—data is the foundation upon which the new process is built and the input for the six sigma analytical tools we use for process refinement.
Establish a corporate transportation mandate and awareness campaign—This next item seems so obvious that I hesitate to write about it here, yet its absence has been the downfall of many transportation cost reduction initiatives. The reality is that in most major organizations the transportation spend is so inexorably linked and impacted by other functional disciplines that the transportation department by itself cannot meaningfully drive cost reduction. A cross-functional approach that eliminates silos is required with the active and highly visible participation of senior executives. If you can do nothing else, start here—it will set up the necessary internal dynamics to put the wheels in motion and provide the needed traction for long-term improvement.
The sum of all its parts
There is no simple way to drive down transportation costs. However, the essentially basic approach of understanding the details of what constitutes your total transportation spend; the ability to manage high velocity transactional data; along with the support and leverage that a highly visible and active corporate mandate provides go a long way toward helping you achieve your transportation cost reduction goals.
Gerry Fay is Chief Global Logistics and Operations Officer for Avnet Inc., Phoenix, a global distributor of electronic components, computer products and embedded technology.