Describing the current global supply chain environment as “chaotic” is an understatement. Even before the events of the past few years, the industry ran in boom-and-bust cycles that swung the pendulum back and forth between shipper and provider.
However, logistics service providers (LSPs) who know how to marshal their supply chain through thick and thin can create mutual value and longstanding trust that will last multiple bid cycles.
As companies shift gears and prepare for the downward side of the cycle, what do you think they will prioritize? (Hint: we covered it in part one of this two-part series). Some shippers may need help meeting OTIF expectations, others may be under a mandate to slash their supply chain costs, some may be on the cusp of a new product launch or network redesign and need consultative, expert help to succeed. Whatever their challenge is, cost, service, and control are the three levers available to create differentiation between providers bidding on an outsource opportunity.
So, with similar end-goals in their crosshairs, how do LSPs differentiate themselves in the eyes of their shippers?
The traditional LSP playbook is usually to conduct a bid, leverage their buying power, and shuffle the carrier deck, but that doesn’t always cut it.
It’s a tumultuous process for shippers to constantly need to reconfigure their carrier network to avoid rate acceleration. If you can bring a solution to the table that addresses inefficiencies that can offset carrier rate increases, you can improve network performance stability while still delivering on your commitment to saving customers money.
Innovative LSPs, who have for a long time been at a disadvantage in carrier negotiations, have turned to other outlets for cost reductions outside of rate decreases. These LPSs harness the latest technology to offset their smaller staff size and lower leverage with carriers. But when a carrier can come to an LSP mid-cycle with a cost increase, continuous improvement strategies are more resilient since they address efficiency issues at their core.
A strong TMS to manage on-the-ground logistics operations and a visibility platform to assess network performance and financials are the two building blocks of how niche LSPs have created cost reductions for shippers without needing to lower carrier costs.
Think for a moment about the most pressing supply chain disruptions. Sure, the widespread, universal supply chain depressions that the pandemic brought were deep cutting, but they were planned for and experienced across the board. What about on a micro level? The last mile traffic jam that misses a production cut. The snow storm that delays an outbound order. The variable headwinds that your customers’ supply chains uniquely face in their geographical mix.
How do you manage against the unknown? How do you become a champion for your customers? Using real-world, hyper-localized data is a start; but how you manage, analyze and generate insights from that data is where you will separate from the competition. Being able to harness next-generation artificial intelligence and machine learning processes to surface recommendations can help avoid a shutdown, a stockout, or an unnecessary expedite before it even catches your attention.
The second half of the battle is scope of data. As an LSP, you bring to the table more data than an individual shipper would ever have access to. Augmenting that with additional data from a visibility platform enables you to provide more granular recommendations, execute at a higher standard and bring a more consultative approach to their supply chain challenges. You’d now be equipped to answer not only “how should I get this product to the shelves” but “where would the optimal DC location be” or “how can I develop a better fulfillment strategy”, which can foster deeper relationships that transcend bid cycles.
For these reasons, many shippers now demand that real-time visibility be included in an RFP. Some large LSPs maintain large teams just to manually provide data to customers — this is no longer sustainable. Those LSPs who automate the collection and analysis of their data will improve their overall solution and win more business.
What if your biggest value provided went beyond capacity? What if you helped enable and foster a culture of connectivity between your customers’ siloed roles?
While sharing as much information as possible is ideal, it can create a lot of work for both the provider and the recipient. At the highest level, tracking and tracing functions, ETA management, and even tendering to a carrier, can benefit both you and your customers when fully digitalized. Having an aggregated ledger, immediate connectivity and one source of truth streamlines operations and opens up bandwidth, mutual understanding, and deeper engagement between you and your customers, and between your customers’ stakeholders.
How many conversations are your customers having with their finance teams to validate a carrier detention bill, an expedite charge, or a vague accessorial? The beauty of using an intermediary platform between the carrier and the shipper is its neutrality. It actively tracks events and serves them up in a singular view to help identify root causes of any charges, validate their accuracy, and check for any data discrepancies to better-contest bills.
If the world could agree on one thing after the last few years, it’s that the supply chain has never been more of an integral part of our society. Now, the conversations that occurred in your customers’ back rooms have moved to the boardroom – it’s time you elevated your bid package to meet those executive expectations.
Where capacity at a low cost and a reliable transit time used to be your differentiator, the broader business focus on and use of supply chain data has increased, and so have executives’ expectations for what they get with their investment. The small LSPs who disrupted the industry when capacity ran dry and costs skyrocketed did so by harnessing the power of innovation and technology to deliver unparalleled savings, access and control.
As you gear up for how you go to market in the upcoming bid season, recognize your shipper customers aren’t just assessing your freight under management figures and carrier relationships, they’re critiquing you on how well you can deliver on their dynamic business objectives, and deliver their supply chain to their stakeholders with ease.
Since day-one, our recognition of the importance of the LSP in the world of supply chain has driven us to develop highly marketable technologies to add to your solution mix. From modular designs, personalized configurations, and even branded platform views, your ability to craft proposal responses infused with industry-defining technology is available. With FourKites, your solution is more sophisticated and generates greater savings, commanding a higher management fee that customers are more willing to pay.
If you’re ready to understand how to kick your bid responses into hyperdrive with FourKites, reach out to us at [email protected] – we’re ready to help.