The implementation of a TMS (transportation management software) is the first step to automation, visibility, and ultimately, cost savings in your supply chain. However, you won’t see ROI in your TMS investment unless you’re actively taking advantage of the visibility it provides. You now have the power to view, analyze, and take action on a huge range of data. Actively monitoring and making decisions based on these reports will be key to creating efficiencies and cutting costs.
It may be overwhelming trying to decide exactly which data you should be analyzing. According to our TMS team, these are the top five reports you should absolutely be running:
Freight accruals are used to keep track of the costs associated with the transportation of your goods to a customer. Costs are accrued from the moment the goods are delivered, and they are discharged once the freight invoice has been paid. Tracking freight accruals allows your company to calculate your true net revenue at any given time by providing insight into any outstanding balances that have accumulated during a specific timeframe.
Cost allocation reports break your freight charges down by the mile, the pound, or the SKU. For multi-stop loads (or loads made up of multiple POs), freight charges can be allocated to each order based on the percentage of distance, weight, or quantity the individual order contributed to the whole. Tracking cost allocations will give your company valuable insight into the true cost of transporting goods and can be used to identify costly SKUs or lanes.
Carrier scorecards are used to track a carrier’s performance based on their tender acceptance, on-time pickups, and on-time deliveries. Carriers who bid low on an RFP and then proceed to decline tenders or provide poor service can either cost your company thousands of dollars in additional expenses or, worse yet, cause you to lose customers. Tracking carriers’ performance can help you reevaluate your routing guide by selecting more reliable carriers on trouble lanes, improving both costs and customer service.
Least Cost Carriers
Least cost carrier reports are used to identify loads where the carrier with the lowest cost did not haul the freight, the reason why, and the additional freight charges that occurred as a result. By tracking least cost carrier usage, your company can identify potential problem areas, resolve the underlying issues, and prevent unnecessary expenses from occurring in the future. If you are looking to cut freight costs, this report makes it clear and simple to see missed opportunities where money could have been saved. Since cost isn't the only factor when selecting a carrier, you can also use this report to identify carriers who are repeatedly passed over despite offering lower rates, providing an opportunity to work with these carriers to set up a service level agreement before you decide to award business solely based on cost.
Power lane reports are used to identify new lanes and provide a benchmark for negotiating contracted rates with carriers. You can identify a new lane as an origin-destination pairing that occurs a set number of times. Once a new lane has been identified, the spot market rates paid to move the lane can be broken down by load, mileage, pound, etc. and can be used as a point of reference when negotiating rates with carriers. By identifying power lanes, you can secure fixed rates on a lane, making it easier to predict future freight costs.
Note: Most transportation management software products have the ability to run the five reports listed above. If yours does not, or if you are interested in implementing a TMS into your supply chain, feel free to request a consultation with our logistics consultants, who can help assess your needs!