Collaborative Transportation Management

5. Key Transaction Areas

Table of Contents

There are three transaction areas that represent key opportunities for CTM. These are: 1) capacity procurement, 2) inbound management, and 3) integrated movements. Each area is described along with potential benefits.

Capacity Procurement

Capacity procurement represents the interaction between the shipper and carrier to arrange transportation capacity. Even when transportation capacity is negotiated under contractual arrangements, the carrier must often anticipate the needs of the shipper and make quick, and often imperfect, decisions when a load is ultimately tendered. Through collaborative planning, the carrier can anticipate demand much better than if left to guess where and when demands for service will surface. Providing the carrier with load tendering plans is also beneficial for shippers. Through improved planning, the shipper can seize load consolidation opportunities not otherwise available. The load tendering process is simplified and administrative costs are reduced. The shipper can also reduce the carrier base and better leverage its carrier base nationwide, reducing the shipper's total freight cost. In return, carriers benefit from increased volume commitment, guaranteed lane assignments, process simplification, and reduced administrative costs.

Inbound Management

Inbound management refers to the proactive control of inbound goods flow and management of transportation by the receiver of the freight. By exhibiting better control of inbound freight, the receiver can reduce transportation cost through inbound consolidation and vendor allowance. Compliance issues should be more precisely defined and enforced. Overall lead time and lead time dependability can improve, resulting in better sales with reduced levels of inventory. Carriers benefit from increased volume commitment, guaranteed lane assignments, and advanced scheduling predictability. Collaboration of inbound management involves not only the carrier and receiver but also the shipper. As a result of transferring freight management responsibility to the receiver (i.e., converting freight payment terms from prepaid to collect), the shipper reduces its own administrative expense and diminishes its risk of shipment refusal. With dependable lead times, inventories can be reduced and, quite possibly, sales will increase.

Integrated Movements

Integrated movements, or continuous moves, involve aggregated volumes for multiple locations within a company, across divisions or even across companies. Shippers and receivers benefit from reduced freight costs, an increased amount of dedicated usage, and improved service. Receivers that enjoy greater control of their inbound freight movements can realize opportunities for coordinated and consolidated inbound-outbound movements. Carriers can improve asset utilization while reducing empty miles, labor cost, and sales and administrative expense. By developing scheduled tours, the carrier enjoys greater familiarity with customers that leads to better service. Scheduled tours may also include closed loop, milk run service to accommodate returnable container usage or any other reverse logistics flow.

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