Data-driven decisions in freight management refers to using data to make important decisions, rather than emotion or gut feel. When dealing with Freight, which is such an important component of a companies offering, both from a cost perspective and the impact on customer satisfaction, it is critical that you take emotion out of your decision making. Freight is often one of the top costs for a company, and there is significant discrepancy between the different freight carrier options in Australia and New Zealand. A freight management system allows a company to compare each carrier option on data alone. With Cario you get operational visibility and reports that enable you to negotiate better rates and optimise freight spend. You also receive DIFOT reporting which can be used as a reference in your negotiating – as well as help you really compare carriers on performance data.
When making decisions on your freight management there are a number of data points that you should consider to run your business. Firstly, Delivery on full in time (DIFOT) is a key metric, that allows companies to see each carriers performance in a very transparent way. There is no way for carriers to hide, so when a carrier tells you a certain ETA, the DIFOT performance will clearly show on how many occasions they met that ETA or not.
Another key data point to consider is the cost of your freight. This can be analysed in several different ways, such as total freight cost, cost per cubic metre, cost per consignment, cost per customer, cost as a percentage of revenue etc.
A good freight management system will provide you with all this data through their reporting module. Perhaps the most useful data point here is the freight cost as a percentage of revenue. If this is increasing, this tells you freight is eating into your margins, and you may need to re-evaluate the freight carrier you are using.
Data driven decision making is critical to get the best freight management solution for your business.
Data analysis involves taking numerous data points and metrics, and using this to see trends within data, which you can then make decisions on. Good data analysis will be able to pick up trends over time, and surface issues that you may not have realised were there. An example of this is seeing freight costs overall increasing in a company with no revenue growth. The initial thought may be that the freight carrier has increased their pricing. However, on more detailed analysis, you may find that the number of consignments has increased, which is driving an increased cost due to minimum freight charges.
Data analysis on these types of trends is critical, as it can save companies large amounts of money. Having good freight management software to be able to provide these data points is key, as from the data, you can then make critical business decisions.
Data driven decisions allow a company to know with certain that they are optimising their freight management. With all the data available today, there is now increased transparency between freight companies. By utilising a freight management system like Cario, companies can clearly see which carriers are performing well, and in which locations. This allows companies to run their business with systems and not people – knowing that when they choose the blue truck not the red truck, they are choosing that one not because the truck driver is a friend of the Warehouse manager, but because the blue truck has provided the best service. Data driven decision making allows a company to scale without having to hire more people in a linear model. A freight system can make far more decisions quickly and accurately, so a business’s growth is not held back due to a reliance on people in the warehouse.
For businesses to be able to use data to make decisions, they need to be confident the data is accurate. This is very important, as having incorrect data will mean any analysis that is done on that data will be inaccurate.
To ensure you have the most accurate data, a business should ensure their freight management system collects and stores all possible data related to the entire process of freight management. Firstly, this includes all data relating to freight cost, such as any surcharges, rate structures, correct zoning schedules, and any temporary fees. Secondly, the freight system should capture all ETA and POD data in real time, so that DIFOT reporting is accurate. Ideally, the freight management system should also be able to access internal financial information, such as product data and total revenue, as this can then be used for financial analysis to make the most accurate data driven decisions.
To be able to make data driven decisions, you need to ensure you are collecting the right data in a timely manner. Freight management software such as Cario, pulls together all this information from a variety of locations. Within Cario, all the carrier rate structures, carrier, zoning and surcharges can be held. Some of this data can also be access in real time from a freight carriers system, if they are API enabled and set up to do this. Cario then collates this data with all other information that is known about a consignment, such as dimensions, allowing a business to have all data related to each consignment at their fingertips. When aggregated at scale, this data will allow data analysis to show trends that enable better decisions to be made.