Managing the distribution of goods in the retail world is unique in many respects. Although your company experiences the highs of peak season demands and seasonal capacity pinches, lulls and stoppages rarely occur. For this reason, to successfully fulfill your role and keep your busy supply chain running, optimizing on the go is your only option.
Here at Anderson Trucking Service (ATS), our time helping industry-leading retail businesses distribute their inventories, stick to their timelines and deliver for their customers, has been filled with learning experiences and refinement.
For this reason, we understand the intricacies of general merchandise transportation. This knowledge includes the common pitfalls companies run into when moving retail goods and, most importantly, the core things that — when done correctly — help businesses get more from their transportation experiences with every load.
This is the knowledge that you deserve. With it in your toolbox, you’ll find it easier to manage each of your shipments and facilitate fruitful transportation provider relationships.
To help you achieve this end, below you’ll find the four keys to retail shipping success.
Prioritizing these things has helped many of the world’s largest retailers stand by their commitments and achieve even the loftiest of goals. We think it will do the same for you.
Four of the things you'll want to prioritize when managing your retail transportation network are:
- Developing and maintaining relationships with your core providers.
- Building out your network based on each provider’s areas of strength.
- Monitoring and controlling the size of your carrier network.
- Monitoring every provider for key performance indicators.
#1 Developing Relationships With Your Core Providers
As a person straddling multiple industries every day (retail and transportation) it can be difficult to dedicate equal energy to each. Time spent analyzing purchase orders and surveying inventory counts is time spent away from monitoring and boning up on the transportation world.
The last thing you want is to make avoidable mistakes — in either industry — due to a lack of time and/or resources.
Just as internal expertise and delegation tactics can help you save time and get more from your job as a retail professional, relationships will be your strongest ally in the transportation world.
With the right partnerships in your corner, the process of moving your freight can become second nature. Instead of freight shipping being something you don’t understand, filling you with dread or intimidating you, a great transportation network will become your support system — chock-full of boundless expertise for you to draw on and turn to.
Though it will take commitment initially and a keen process for finding, vetting and selecting great providers, some of the most fruitful shipper-provider relationships extend beyond the business world.
But how do you develop the types of relationships that you deserve with each of your providers? And, what kind of commitment will this take on your behalf?
Both of these are valid questions; creating mutually-beneficial partnerships will be crucial to the long-term success of your retail supply chain. Based on our experience in the transportation world, however, the process for developing them is rarely outlined for shippers in any digestible way.
That’s enough of that, don’t you think?
Here are the things you should do to develop and maintain the healthiest, most mutually beneficial transportation provider relationships possible:
- Make communication and responsiveness expectations clear during vetting procedures.
- Agree to preferred methods for how concerns will be addressed when they come up.
- Regularly schedule (quarterly, monthly, etc.) touch-base meetings with the specific goals of discussing what’s working and what’s not.
- Ensure that your preferred procedures for appointment scheduling, loading and post-delivery follow-ups are communicated from the get-go.
- Consider hosting annual networking events for the carriers in your network and corporate employees.
- Facilitate visibility and communication between your company leaders and those heading up your core transportation companies.
Shippers that do these, and things like these make great partners for the transportation companies that, like you, have a lot on their plates. By establishing expectations up-front, facilitating proper communication methods and channels, regularly touching base and creating shared experiences, you’ll see your supply chain flourish going forward.
Over time, as competencies are gained and understandings are shared with each provider, the best of them will adjust to meet your needs as they arise — no matter how out of the box they may be.
A mutually beneficial partnership is hard to come buy in an industry as competitive as transportation. That said, if you’re able to establish it, you’ll like the benefits of doing so.
#2 Building Your Network Based On Each Provider’s Areas of Strength
For retailers, selecting transportation companies with the ability to come through for them whenever they need them to — even on short notice — is non-negotiable. That said, too many shipments fail due to crossed wires and inflated expectations for one transportation company or another.
You see, the largest retail businesses have expansive numbers of brick-and-mortar locations to stock and manage. From the coast of California to the tip of Maine, each outpost needs equal attention and proper oversight.
Needless to say, the logistics of this can be complex — especially without a well-formulated transportation network.
When it’s time for tires to hit the pavement, for the rubber to meet the road and for those products to reach store shelves, you’ll want the right carriers in your corner.
So here’s what you need to keep in mind: Transportation companies each have established areas of strength.
These are areas, regions and/or locations in which a carrier is strongest. In these locations — bracketed by well-rounded infrastructure, a customer base and extensive driver domicile — your carrier can offer competitive pricing and reliable service.
Even in the busiest of times and on the shortest of notice, trucking companies — which must uphold their commitment to keeping drivers loaded and moving — can help their customers secure capacity within their areas of strength.
As a shipper’s needs edge away from these regions, however, a carrier’s ability and willingness to move shipments falter. Without the established infrastructure and Rolodex of customers that their strong areas offer, many carriers simply can’t meet capacity demands or price their services as competitively as others.
For this reason, when building your transportation network, it’s important that you verify each prospective provider’s area(s) of strength and select accordingly.
Take into account the locations you send freight to often and the lanes you’ll need each provider to frequent. Does this company have the ability to meet these demands reliably? Is it possible that there’s a better fit out there?
Be sure to ask each company questions about capabilities and regional preferences. These questions could include, but aren’t limited to:
- What areas do you feel strongest in?
- How many trucks and trailers can you dedicate to _____ area?
- Do you feel comfortable handling ___ loads per (timeframe) out of ____?
- Do you have a customer base in __(your destination)__ to help you procure back-haul freight?
For larger retail companies, make sure to build your transportation network in this way.
If, for example, you’ll need 100 loads a month moved within both the Northeast and Southwest, build up a network of “strong” companies within each of these regions.
The last thing you’ll want to run into with your contracted providers is a lapse in capacity because one of your vetted carriers doesn’t have the ability to reliably service freight.
For this reason, make sure you thoroughly understand both the network size and operational stability of each provider you use.
#3 Monitoring and Limiting the Size Of Your Carrier Network
One of the questions we’re asked frequently by shippers across industries is “how many transportation providers should I have?”
Unfortunately, as you can imagine, there isn’t a cookie-cutter answer to this question.
Every company is different and each industry comes with unique challenges.
That said, retail companies — especially those with a high volume of freight to transport — commonly make a crucial mistake where this is concerned and add too many companies to their transportation networks.
On the surface, this tactic makes sense; maintaining a network that’s brimming with carriers, each capable of moving a short-notice load or two, feels like the ultimate safety net — covering shippers against potential delays and capacity shortages.
This isn’t necessarily true though. You see, with too many hands in the mix it gets really difficult for logistics professionals, like you, to adequately develop manage and maintain relationships with core providers.
In the end, a massive pool of options damages these companies as they’re unable to optimize with and monitor the performance of a grouping of core providers.
If possible, you’ll want to avoid this. To help you do so, here are two general rules of thumb to follow:
- Never have more carriers in your transportation network than you’re capable of maintaining a relationship with. By committing yourself to this rule, you’ll find it far easier to develop those long-term partnerships we talked about above.
- Give 80 percent of your freight to 20 percent of your carrier pool. Organizing your network in this way will allow you to get into a steady flow of freight movement as each provider learns your procedures, preferences, commodities and company. The remaining 20 percent of your freight can be delegated to your larger pool of less-familiar carriers. These should be companies that you’ve vetted thoroughly, just use less often.
While these rules of thumb are just that — general, loose, guidelines — managing your network using similar tactics will do you well long term.
Trucking companies and their drivers like working with companies that have consistent freight demands. By selecting and working with a group of core carriers, this is exactly what you’ll be giving them. With this expectation of repeat business will come added attentiveness from each of your core providers.
Key #4 Monitoring Every Provider For Key Performance Indicators
Once you’ve selected a core network of strong transportation companies to utilize and have started the process of building rapport with each of them, you’re well on your way to a healthy retail transportation network.
Now to maintain it.
Keeping your supply chain in good health will take some oversight. To get the most from your provider relationships on a consistent basis and hold them to the standards you’ve set, it’s important that you utilize the right metrics for monitoring each of them.
In the transportation world, there are several key performance indicators, both tangible and intangible, that carriers should be tested for regularly. Collectively, these indicators help logistics professionals, like you, make the most educated decisions for their retail freight.
Although the key performance indicators you should utilize will vary based on your situation — which makes consulting an expert crucial — many companies in the retail space test carriers for:
- On-time arrival rates
- The amount of time you budget to get a truck loaded and out the door toward your consignee is important. Doing so efficiently get’s far more difficult when your truck shows up late. Make note of each time this happens and should your provider’s on-time arrival rate dip below 95% it might be time to figure out what’s wrong.
- On-time delivery rates
- On-time departure — and, in turn, delivery — can falter when working with an inconsistent provider and hinder your ability to keep you supply chain on track. Once your provider’s on-time delivery rate starts to drop below 95% it’s time to figure out how you can better optimize together.
- Tender acceptance and rejection rates
- As the total volume of monthly freight you move increases, so too will the number of hands in the mix. For this reason, setting baselines for tender acceptance rates with your core providers will be important. You see, following an initial rejection, the costs associated with moving a shipment nearly always rise, with one study sighting a 14.8 percent rate- increase on average. The industry standard healthy tender acceptance percentage rests between 85 and 95 percent.
- Brokered vs. asset ratio
- Some asset trucking companies have brokerage authority, allowing them to extend their reach beyond the asset equipment they own. When this is the case, it’s important that you monitor the percentage of loads they’ve serviced with asset equipment compared to what they’ve brokered to external carriers. Your comfort level with having brokered, third-party carriers hauling your freight will obviously depend. That said, any brokered truck should always be communicated as such before they show up, and repeatedly doing this may indicate a carrier’s inability to meet your requirements in-house.
- Invoice accuracy history
- Great transportation companies have well-rounded invoicing procedures and teams. These companies take care during onboarding procedures and double-check documentation, numbers, addresses and dates. That said, not every company is created the same. Calculate your provider’s invoice accuracy rate by dividing the correct invoices by the total amount they’ve sent you and if you’re left with a number below 95 percent it might be time to talk about it.
Using these five KPIs — and a grouping of non-tangible indicators — some of the best retail shippers create internal grading systems for their carriers. Grading carriers from A (at the best) to D or F (at the worst) helps these companies manage larger networks and make decisions on the extent to which each provider should be utilized.
Related Article: Transportation Provider KPIs: How to Evaluate the Performance of Your Network
A Final Note About Retail Transportation
Now that you understand the impact that prioritizing things like relationship development, key performance monitoring and constructing your network the right way can have on your supply chain, let's take this conversation a step further. . .
No matter how much emphasis you put on these four things in the year to come, without quality providers to lean on none of your efforts will make a difference.
For this reason, it's crucial that you fill your network with transportation companies that have the wherewithal to meet your needs and value the things that matter most — things like safety, reliability and customer service.
To help you do this, we invite you to download our free freight carrier vetting guide. With these 30-questions at your disposal, you'll walk away from each potential-provider interaction with peace of mind in knowing that you got all the information necessary to make the right decision.
Here at Anderson Trucking Service, we've been helping companies in the retail and general merchandise industries for decades. So, if you're ready to work with a company that can truly execute on its commitments, offer top-of-the-line service and make your life easier, reach out today. We're always happy to help great companies meet their goals.
