How Optimizing Transportation Routes Leads to the Perfect Level of Efficiency
- Sourcing Optimizer
- Transportation and Logistics
When you’re building a complex, multi-stage transportation route, you have dozens of factors to consider. How quickly do you need goods moved? Is the financial bottom line more important than speed? Will each provider have the capacity to move your full shipment? At what point do you trade simplicity for cost?
A single transportation lane from the interior of China to the Midwest of the United States will likely include several modes of transportation. From origin to destination, the route might require bulk ground transportation, ocean transit, and possibly even break bulk warehousing and last mile delivery. Each of these activities has its own price, speed, and mileage factors. But until now they were all added together linearly to determine the total cost for servicing the lane.
But what if cost isn’t the only factor you need to consider? For some businesses, driving down costs is the top priority. For others, having the most direct, fastest route outweighs pricing. Still others might be environmentally conscious and want to minimize mileage, even if it means an increase in cost or time. Your shipping routes should conform to your organization’s needs, not the other way around.
Some transportation providers have partnerships that offer lower costs of service to alternate ports, or working relationships with specific warehouse providers. Others might offer green transportation options or priority loading and unloading. Traditional shipping methods would overlook these benefits in order to build a linear transportation lane that may or may not fit your needs. Being able to leverage these kinds of connections at every step of the transportation process will give you the power to optimize your shipping lanes exactly as you need to, and to prioritize the factors that match your company goals.
Gaining control over these decisions requires examining each step in a multi-stage shipping operation individually. Organizations need full visibility and control over the pricing of multiple legs in their transportation supply chain, and a clear view of how they affect the entire network. Procurement leaders must optimize the value of the entire transportation supply chain by better understanding and de-coupling the multiple legs within it.
JAGGAER’s all-new Routing Network Optimization tool allows you to do all of that. The RNO solution drives efficiency by breaking each shipping route into its individual segments, then allowing providers to bid on specific segments of the journey. Providers can go even further by inputting alternate origin and destination points that subsequent modes can connect to and continue on. Plus, providers can include capacity information in their bids, ensuring they have the ability to move all the goods you’re shipping. All of these options and segmented pricing are then optimized using JAGGAER’s world class Sourcing Optimizer technology to present various possible outcomes. Each scenario is limited using the buyer’s constraints, allowing or rejecting the alternative destination points. With full control over each individual leg, greater total value can be achieved than if the entire route was priced singularly as whole.
Organizations of any size can take advantage of this capability, even if they’re not transporting goods globally. Domestic delivery routes can take advantage of RNO as well, breaking down shipments into segments anywhere a ‘handoff’ of cargo occurs. Bringing multi-stage shipping control to your company is essential in order to maximize possible efficiencies and drive cost savings.