SmartSourcing: A new lens on an old challenge

When was the last time you thought of transportation as a profit center in your business? If you are a manufacturer, you tend to think of it only in terms of a cost center and perhaps a “necessary evil” to your organization. Perhaps it’s time to create the “ideal transportation department” by creating a culture of innovation—allowing people to fuel practical innovation in everything they do.
The goal has been simple. Find ways to engineer cost out of transportation management and create the conditions to add profit. SmartSourcing embodies the spirit of this effort and establishes the framework by which to deliver on that objective.
Innovation starts with greater visibility
Shippers say one of the greatest things they gain by SmartSourcing is the visibility to a litany of transportation-related metrics. Most companies with insourced transportation management lack the technology and systems to efficiently capture data, an important step to baseline current performance. SmartSourcing provides shippers with access to powerful executive dashboards, which deliver metrics and KPIs right down to the shipping cost per item, per customer, per region in real-time 24/7. Ultimately, this visibility and the analytical consultation begins the discussion on how to use transportation as a strategic asset and make better business decisions in the future.
An example of using information to grow strategically is how shippers examine the implications of cost when entering new markets. Having the tools to have a short-term and long-term view allows them to decide the threshold to entry on margins. Then, as volume and market share increase, so will their profitability through lower average freight costs. The same holds true as shippers experience variation in their sales cycle. SmartSourcing helps shippers develop transportation profiles and strategies during downturns to ensure they always achieve the greatest possible efficiencies. Moving transportation from a cost center to a profit center is the core objective behind SmartSourcing.
Increased control and efficiency
Transportation has long been considered a highly transactional, paper-intensive business. SmartSourcing has optimized traditional workflow and documentation requirements through digital innovation. It can make the shipper understand where the pinch points are in the process. SmartSourcing is well-versed on working with shipper IT departments to build system bridges to allow seamless exchange of data and metrics in real-time. SmartSourcing solutions custom fits the shipper’s business, and in most cases is a much better solution than asking them to adapt to an off-the-shelf platform that allows for little flexibility and creates a lot of headaches.
Innovation requires a proactive culture
Companies with insourced transportation departments generally look at the role of transportation as transactional. They typically execute basic budgeting tasks, some route design and planning, but mostly tactical functions are performed. Basically, insourced transportation departments are highly reactive to decisions made in other business units, to transportation-related challenges, and to the strategic demands of senior management.
SmartSourcing has worked over the years to develop a strong, proactive culture, which is essential to creating an environment where innovations can occur. It is about rewarding courage and opening the door for all levels of the company to not be afraid to disrupt status quo and think of things differently. Adding the strategic function to a transportation department is not a simple task. It requires the development of experienced people, processes, and technology tailor-made to suit a company’s specific transportation needs. The ideal transportation department adds many upgrades to a tactical transportation function including operations, process, and compliance, but it mostly affects strategic capabilities in the form of information, design, and procurement.
Partnership includes carriers
A critical component to make this model work is the identification and selection of progressive carrier partners to the mix. SmartSourcing recognizes the foundational importance of having quality-driven, reliable carriers transporting clients’ products on a consistently timely basis—whether outbound or inbound. Like any transportation business, carriers seek predictability to properly resource and manage capital expenditures, equipment maintenance, and driver retention. Rates are always important, but having assured volume, fast pay, and a partnership that recognizes everyone needs to be profitable, works to ensure cost structures remain competitive and fair. Driving success means finding carriers that share the SmartSourcing vision of aligning the value delivery chain and building lasting relationships that benefit all.
Strategic collaboration and co-mingling
While important, technology is just part of the solution to drive optimization. To increase efficacy in co-mingling even further, SmartSourcing strategically targets shippers whose natural freight profile is similar in geographic dispersion and product category of current clients. This drives greater opportunities to fill trailers and drive cost efficiencies on a more frequent basis.
Consolidation is particularly well-suited to the food industry where distribution points may be common and temperature control is often required. On the surface it seems simple enough to execute, but without a subjective, third-party transportation management company involved, the process can be arduous and almost impossible to manage. The challenge is that companies often lack sophisticated software, freight planning expertise, and data transparency to ensure costs (and savings) are appropriately spread to all parties involved. Through investment in people, process, and technology, SmartSourcing as the model to drive high-efficiency comingling has become the thing of the future for shippers.
Lakeside is seeking to develop new carrier partnerships throughout North America, particular in the refrigerated transport space. If you have extra capacity, we have consistent freight volume.
For more details on this and SmartSourcing, contact Lew Plevan at 905-338-4004, email [email protected], or access the website at www.lakesidelogistics.com.