Effective carrier management is crucial for shippers to increase efficiency and profitability. Carrier management services, systems and software can offer valuable insights, tracking and access to important data. This enables greater visibility, control and understanding of carrier costs and logistics via tools like carrier scorecards, rate management and claims management.
Carrier management is therefore a vital component of transportation management systems (TMS) that provides significant benefits for shipping and logistics companies. While it is true that certain aspects of carrier management may require a manual approach, most aspects can be managed through carrier management system (CMS) software.
Investing in CMS software can give businesses access to valuable analyses and reports# for the likes of demand forecasting or shortages of fuel. A CMS can also help ensure contract compliance with carriers and ensure that their performance meets the expectations set within carrier contracts.
Carrier types within logistics explained
A carrier professionally transports goods or people by land, water or air. In logistics, there are three main types of carriers: common, private and contract.
A common carrier transports products from A to B with a need for large-volume contracts or specialised supplies. Examples of common carriers include trucking companies, shipping lines, airlines, rail freight services and bus lines.
A private carrier is a company that owns the vehicle(s) used to transport their very own specific goods. Private carriers are generally not available for hire.
A contract carrier is a logistics firm operating for specific companies under the terms of a contract. They may also offer specialised services, such as delivering medical equipment or transporting fuels, chemicals and other sensitive materials.
Carrier performance evaluation
There are several ways in which carrier performance can be scored, evaluated and tracked, including carrier performance and contract compliance. We’ll explain each of these below:
Carrier performance scorecards provide a way to objectively evaluate and compare carriers over a period of time. They track and measure a carrier’s performance through key performance indicators (KPIs) on both a qualitative and quantitative level. Scorecards give businesses insight into carrier performance beyond what is visible at first glance. They are useful for tracking factors such as delivery timeliness, invoice management, shipment damage, billing accuracy, responsiveness, and more.
Contract compliance is a method that ensures that all parties involved in a contract (carrier and shipper) are meeting the expectations outlined in the mutually agreed upon contract. Using contract management software can help streamline and automate this process by tracking and monitoring the contracts within the system. Additionally, it eliminates the risk of human error associated with the manual management of contracts.
Best practices for logistics management
Logistics management is the process of identifying efficient and effective ways to transport products from A to B. Carrier management plays a crucial role in the latter stage of this process, specifically in relation to contract compliance and the logistics of transportation. The focus of contract compliance is ensuring that the mutually agreed-upon deal between both parties is being met, while the focus of logistics transportation is to optimise speed and fuel usage to both reduce costs and increase customer satisfaction.
Logistics management: what are the seven Rs?
In logistics management, there are seven ‘R’ rules by which all carriers should abide. These are:
- Right product: it is essential to have a clear understanding of the current market for your product and potential future liabilities. This allows you to accurately forecast demand and ensure that the right product is delivered on time, every single time.
- Right customer: you should focus on building long-term relationships with customers, as positive experiences lead to increased customer loyalty and potential referral to other businesses.
- Right timing: ensure that deliveries are made on time, every time by using CMS or TMS apps or software to analyse and predict potential delays or traffic patterns in order to provide customer delivery date forecasts with greater accuracy.
- Right location: creating, developing and maintaining local connections can help businesses fulfil or deliver products with greater speed. Carrier management services are also useful to track truck location and delivery accuracy, ensuring that products arri00000most care and attention to handle, store and pack the goods, ensuring they are delivered in good condition, regardless of any issues that may arise during their transportation.
- Right quantity: predictive software can help to reduce the level of back orders, out-of-stock products and overstock by tracking patterns of supply/demand. This once again ensures prompt delivery of the correct items every single time.
- Right price: software can be used to analyse market data. This allows companies to take advantage of the most competitive prices while also accounting for fluctuations in supply and demand, which is important in today’s economy.