Part 2: Modes and Regions
Today’s transportation management system (TMS) technology leverages the power of analytics and automation to improve every aspect of freight operations – including load tendering.
Last week we explained the merits of three tendering methods executed by an advanced TMS: percentage-based, recursive, and deferred acceptance approaches. These options delve into the carrier base to find the optimum group of service providers for your loads.
In this post we take a look at two methods that take a wider view of the tendering process.
1. Best Mode
When deciding how product should be shipped, the choice between truckload, less-than-truckload (LTL), or intermodal depends on a range of factors such as item size/weight, length of haul, and load consolidation practices.
Companies routinely take these factors into account when choosing a mode, and often have preset criteria in place to guide these decisions. However, even well-established selection criteria can be flawed.
Assuming, for example, that all loads over 10,000 lbs in weight are too heavy to be moved by LTL transportation may or may not be accurate. Characteristics such as the cube and the distance covered to final delivery can make LTL a viable option for seemingly heavy loads.
Best Mode tendering helps shippers select the optimum mode in two ways. First, it evaluates all possible combinations of modes and rates and provides a “probable tender” based on the best option in terms of the shipper’s logistics requirements. Second, for shippers that prefer not to automatically accept the probable choice, the system produces a list of possibilities from the most expensive modal combination to the cheapest, and the user can make the final selection.
Sometimes it does not make sense to bid out every lane even if you have not done so for some time. In certain cases the volumes are too small to warrant frequent rebids.
Region-based tendering gives you the ability to bundle low-volume lanes in a region. For example, carriers that serve the Pacific Northwest are asked to provide rates for that region rather than individual lanes. These regional rate structures can be customized to meet a shipper’s specific needs.
The approach can also be used as a back-up for shippers that are unfamiliar with a state or states. The regional rate can be kept as a contingency if new destinations come into play. Or the feature can be used to develop region-to-region, as opposed to point-to-region, moves if desirable.
The five automated tendering methods described in this two-part series can be used individually or in combination. Shippers should take a close look at their networks – and particularly the patterns of demand that shape their logistics needs – to decide which mix of methods is the most effective for them.
For example, the tendering strategies needed by a company that ships canned goods on standardized pallets to the same destinations are relatively simple compared to those required by a shipper of irregular sized equipment that serves seasonal markets.
Factors like these and key parameters such as load density are taken into account during the implementation phase of the TMS. Then it is possible to tailor the system’s business intelligence tools to provide the optimum combination of tendering methods.
These methods, coupled with the analytical power of an advanced TMS, are taking load tendering to new levels of efficiency.
No doubt new options will emerge in line with shippers’ changing needs. Indeed, all of the features described in this series of posts were developed to some degree with the benefit of feedback from users. Moreover, TMS technology continues to evolve, opening up new horizons for critical freight management functions such as load tendering.
If you missed Part 1, you can find it here.