Editor’s Note: This blog post was originally posted in January 2015. We’re sharing this post again because it is still a relevant topic.
Last week we explored ways to prepare for supply chain disruptions that are predictable using the rich functionality of modern transportation management system (TMS) technology. In this week’s post, we explore what is, in many ways, a tougher challenge: planning for unexpected disruptions.
These types of incidents happen with little or no notice. There is scant time to prepare, so shippers have to concentrate on making quick and effective decisions to mitigate the impacts and control the costs incurred. Examples are natural disasters, such as the tsunami that devastated parts of Japan in 2011, and Hurricane Sandy that wreaked havoc on the U.S. East Coast the following year.
When these events happen, shippers are forced to execute emergency contingency plans and decisions, or manage as best they can if they don’t have a plan or have opted for a wait-and-see strategy. The responses can be very expensive since, in many cases, the last recourse is to expedite via air freight.
In these cases, it is critically important that the shipper has accurate, timely information on the status of their freight and the nature of the disruption. Excellent visibility to freight in transit is a must, as is readily available information on alternative inventory sources and freight options, so the shipper can collaborate with suppliers and logistics providers to deal with freight delays. For example, if shippers/logistics managers are aware of delays at ocean ports but are unsure about diverting cargo to other ports, a possible course of action is to terminate their shipments at designated ports and use over the road freight or air transportation options to reduce transit times.
A TMS solution can support this decision making in a number of ways. The system’s spot market functionality allows a shipper to cover a load by contacting a wide range of carriers electronically at the same time and receive responses quickly. The shipper can then compare over the road (i.e., less than truckload, truckload, single-driver, team-driver) and air transportation possibilities, and be judicious about using the relatively expensive air mode. This functionality also helps the shipper make effective decisions on very tight deadlines, because they are securing the most competitive market rates available. The information can be captured as an incremental premium or contingency cost for future analysis.
The TMS can also be used to set alerts and monitor shipment exceptions. Having a team of highly experienced “power-users” as part of a managed services solution provides additional value. These users proactively manage alerts and coordinate with carriers to modify paperwork in advance so that freight can be diverted if needed.
In today’s uncertain world, supply chains are more sensitive than ever to unplanned risks. At the same time, tools—like TMS solutions—are available to prepare shippers for unexpected supply chain disruptions. TMS technology and expertise improve contingency planning and help shippers respond effectively in crisis situations by providing timely information and fostering collaboration with trading partners.
This blog was written by Maria Llamas with contributions from Danielle Shuey.