Best Practices to Optimize Your Transportation Routing Guide
April 1, 2019
The goal of transportation for shippers is, first and foremost, to move goods to market – but doing so efficiently and cost-effectively are hallmarks of best-in-class strategies. Shippers produce and plan this movement, and carriers enable them to achieve their strategic goals as they relate to freight. This partnership, when managed with forethought, data-driven strategies, and by leveraging industry best practices, should be a harmonious one, benefiting both parties.
One simple way for shippers to elevate their carrier relationships is to employ accurate, timely, and comprehensive routing guides throughout their transportation networks.
Without a clearly defined routing guide, teams tendering and dispatching are left without clear guidelines for carrier use. As a result, shippers may incur hundreds of thousands of dollars in added cost by choosing carriers and brokers who are sub-optimal for their lanes. Partner carriers are left feeling disappointed that they were not offered the volume they were awarded in the last RFP. The shipper-carrier relationship is damaged as a result.
Transportation Routing Guide Benefits
Utilizing and maintaining a routing guide is a must for transportation management success. An accurate, up-to-date routing guide ensures that a shipper’s freight is properly aligned with its carriers’ strengths and rate advantages. It also ensures that the shipper meets its commitments to carriers – for example, tendering the expected volume as communicated through sourcing or RFP awards.
Much like the nature of transportation networks for both shippers and carriers, routing guides need to be amended with the ebb and flow of an ever-evolving freight market. Even when well-designed and properly implemented, the routing guide tends to become stale over time. New lanes are added to the shipper’s network, and carrier capabilities and freight flows change with their own shipper portfolios. Market dynamics dictate that pricing that was valid a year ago is no longer competitive. As these changes occur, shippers should have a clear process for how often the routing guide gets updated and how changes get approved. This kind of operational discipline will put a shipper’s transportation team ahead of the curve.
Routing Guide as an Optimization Tool
The routing guide is a shipper’s best resource for creating a baseline of transportation network performance, especially when quantifying the cost savings achieved through sourcing or the start of a relationship with a new carrier. Understanding how closely the network is in compliance with expectations can help the shipper’s transportation team verify how well things are going week to week and where course corrections may need to be made.
Patterns in non-compliance and incremental cost above plan are good potential indicators that it is time for a shipper to make a change in their network. In this case, a resolution could be a one-on-one carrier discussion, supported by data, or it could be time for the shipper to begin a new sourcing event to align pricing and capacity expectations with the current transportation market.
Routing guides that provide useful baselines and insightful metrics for optimization are dependent, however, on the availability and quality of data. Securing the most robust, accurate, and insightful data should be a top priority for any shipper.
With the right data, your routing guide becomes more than a static document, but a key indicator for future optimization opportunities. Understanding your network’s baseline performance characteristics as they stand today unlocks the ability to hold deviations from plan against that baseline, and then determine where change is needed.
Data-Driven Routing Guide Strategy with Breakthrough
As such an imperative means of maintaining the most agile, flexible, and data-driven transportation strategy, routing guide management needs to live beyond your sourcing events. It needs to be actively entwined with your regularly cadenced analysis and decision-making.
Keeping track of all these metrics while running day-to-day execution of the network can be daunting. Backed by one of the most robust and accurate shipper-carrier datasets in North America, FELIX leverages full network supply and demand dynamics to match the right carriers with your freight—creating your ideal routing guide. Breakthrough then offers an in-depth Compliance and Performance Management program that accurately measures network performance and provides specific action items that shippers can take to make improvements every week. This gives shippers peace of mind that they can focus on execution, while being supported with the visibility of detailed weekly updates.
For more information about Breakthrough’s compliance and performance management solutions, contact us.