The right technologies will help your global team make better decisions, faster.
We all have those moments where we wonder why it’s so hard to get something simple done.
Take rate changes for example. The individual rates are not complex and neither are the component parts. Also, a change is not hard to understand. So, why is it so hard to implement a rate change through a global organization?
This issue is at the heart of a new way of managing global supply chains using expertise on demand through the deployment of decision making tools. For the global logistics provider, there is simply too much information to know at any given time. And nowadays, all of the information needs to be known by everyone, everywhere, all the time. It’s information over load. We have moved beyond the point where a user can reliably count on their memory or countless Excel spread sheets to guide them. What if you could just tap into only the information that was needed at that specific moment to make the right comparison, route cargo, or make a quote?
Let’s go back and look at the case of tracking rate changes in a falling market.
The issue is not that one rate has changed, it’s that there are just so many rates to begin with that can be changed and each change has so many component parts. The average mid-sized to large import or export contract has hundreds of lanes per contract while the average NVOCC or Forwarder contract literally has millions of rates. Multiply this by the number of carriers under contract and it immediately becomes obvious why spreadsheets and emails are inadequate.
Today’s organizations are geographically far flung, and this makes it even harder for a global company to leverage the constantly changing prices in the market because every one of these changes must be disseminated through a global team. Leveraging these rates is exactly what carriers who bid to get new cargo routed their way want to happen, though. The process just can’t move quickly enough given all of the other competing demands on everyone’s time.
Desk level users are simply too busy doing other things to focus on and remember all the individual changes. Sometimes it’s easier to think about these changes like raindrops: you can see the market falling just as you can watch rain fall, but once the individual raindrops hit the ground, it is quickly lost in all of the other raindrops and then it’s no longer distinguishable. This is a lot like what happens with market changes to rates. You can see them when they are being worked out and everyone involved seems to know about it, but then everyone loses track a few days later as the negotiations move on to another carrier or trade lane.
Meantime, the operations and accounting people need to know what rate to apply. The solution today is emails, spreadsheets, and a lot of late night communication. Email is wonderful for communicating what is going on right now, but it is not as good at keeping track of everything and you will never see them do the math.
Constant decision making in a changing environment requires technology.
There are simply too many components and combinations for us to memorize anymore. The average rate today has four or more accessorial components that make up 60% or more of the overall rate basis. Working to memorize the market opportunities is admirable, but it has become less than practical for even the best. Expecting that everyone else involved is as current with the market is even less practical.
Rate optimization software creates a standard platform in which all participants within the global organization can function. It’s available on demand so that the right rate can be paired with the shipment quickly and accurately.
This is the essence of information on demand. People are freed up to think about how to get the job done while the machines are leveraged to assist them in gathering and comparing widespread, diverse, and constantly changing information. The machines keep track of when and where the information is relevant without requiring any human time and effort to keep up with the market on an on-going basis. What’s more, everyone is on the same page as soon as the rates are in the system. This applies to both rates going forward and to current rates with the ability to show forward filed accessorial changes.
Today’s perfect storm isn’t going to change soon. Cargo volumes are still low and a lot more new tonnage is on the way. We can expect this to be the environment for at least the next three years. So, what do we do about it? We need to look at using technology to do a better job of administering changes so that the impact of a new rate on a new lane, or the change in one carrier’s accessorials, is immediately visible in relation to all the other available options. And, that change needs to be immediately presented to every relevant user everywhere.