CAN YOUR TRANSPORTATION
NETWORK PASS A VISIBILITY TEST?
A logistics transportation network is more than a collection of regional hubs, and
developing synergy between them is a challenge. Many logistics service providers
find that to maximize a network’s resources, network-wide visibility is needed.
Transportation Network Visibility Test, a management briefing by Quintiq, a Dutch
supply chain optimization software company, details five warning signs of network
1) Planning is done in silos. There are no global KPIs, and local managers make
decisions that primarily benefit their networks. This creates too narrow of a
perspective regarding allocating of resources or maximizing shipment capacity.
2) Bottlenecks and overcapacity are hard to locate. True network visibility makes
it easier to adapt by adding or removing lines, reversing timetables, opening or
closing hubs and addressing unbalanced flows.
3) Missed opportunities for efficiency between networks and transports.
Managers and planners need help to determine when to consolidate shipments and
transport directly. A lack of reliable data and feedback inhibits this.
4) Profitability of a contract is uncertain. The more visible a network, the easier
it is to determine how winning a tender will affect operations and the bottom line.
Asking what-if logistical questions after the contract is a bad sign.
5) The network is stagnant. Reviewing and updating a network, potentially
disrupting existing connections, can feel like ripping off a Band-Aid. However,
regularly doing so is best over the long haul.
E-commerce and consumer spending
continue to drive demand for U.S.
warehouse and distribution-center space,
and construction is struggling to keep pace.
As a result, vacancy rates are at a 17-year
low and rents are soaring, according to
a report by Chicago-based investment
management company Jones Lang LaSalle
(JLL), which describes America’s demand for
industrial space as “insatiable.”
JLL’s Industrial Outlook 2017 indicates that
this year has been busy for construction. The
report identified Dallas, Southern California’s
Inland Empire, Philadelphia, Denver and
Atlanta as the top five markets, combining
for more than half of the nation’s new
development starts in the first quarter.
“Vacancies are at historic lows and in some
markets, as low as 2 percent or less. …
There is also an estimated 247 million
square feet of new industrial space slated for
delivery, a 10-year high,” says Craig Meyer,
president of JLL’s industrial group, Americas.
“These figures show the market is on fire
today for industrial property owners, but in
some markets, it poses unique challenges for
companies searching for industrial space.”
TENDER ACCEPTANCE Definition: The frequency at which a primary carrier accepts tendered loads
— a potential barometer of a shipper’s
relationship management with carriers.
Tender acceptance is a critical metric that
can help uncover such other underlying
problems as poor customer service,
product delays and payment issues.
Field guide: Tender acceptance can have
an impact on the bottom line, as budgets
are typically based on regular primary
carrier acceptance. Should a primary
carrier reject a shipment, acceptance
must be sought from a secondary carrier
— usually at a higher cost, lower routing
guide compliance and greater lead time.
Factoid: According to a 2014 study by
Massachusetts Institute of Technology
(MIT) and C.H. Robinson, an Eden Prairie,
Minnesota-based logistics services
provider, a rejected tender leads to an
average shipment-cost increase of 15
percent. The deeper down the carrier
depth chart, the higher the cost —
shippers that must use a third option pay,
on average, 25 percent more. ISM