The Top 6 Complexities of Carrier Management Within Manufacturing
What is Carrier Management
Carrier management brings you visibility and control regarding your carrier’s actual cost when delivering goods and insight into their overall performance. Managing a carrier's performance is done by scorecards, contract and rate management, and claims management. These different facets of management give you confidence in your carrier's relationships and can prevent or mitigate disruptions in the transportation supply chain.
As a company, you might be accustomed to using a freight audit payment (FAP) system to keep track of disputes and invoices. Carrier management is necessary for maturing businesses as the risk for disruption within your supply chains has taken on a new level of focus in the C-suite.
Manufacturing Changes and Complexities
Supply chains within manufacturing are ever-expanding as markets, society, and customer expectations change. Manufacturers must adjust production, transportation, packaging, and more to abide by the decisions of large buyers. With these changes come more complexities inherent to carrier management. The smallest intricacies of manufacturing can affect a carrier's performance, making it crucial to identify the complexities of carrier management so that you can efficiently and quickly resolve disruptions.
The Effects of Internal and External Complexity Influences
Complexity impacts are the source of changes and can generate minute differences within the process of manufacturing. There is a new set of information and strategies with every change and unique order, creating a need to track each change and ensure proper execution and customer satisfaction.
These changes constitute the influence of such complexities, and the better you understand them, the easier it is to manage them. Complexity drivers receive study at every step of the supply chain, but many studies focus only on manufacturing. Vogal and Lasch conducted a literature review putting these studies in one place.
Studies analyzing the different complexity drivers typically categorize them as either internal or external. External complexity drivers are a result of outside forces. These are decisions made or instances occurring outside of the manufacturer's control. These external forces can range from the weather affecting transportation to societal changes that affect the market.
The company actively influences internal complexity drivers rather than having them out of direct control like the external drivers are. The internal complexity drivers are the decisions the company makes either on its own accord or in response to the external complexity drivers. A company’s decisions on employment, the number of distribution sites, and intermodal transportation are all internal complexities. These decisions can affect aspects of manufacturing like their products and production processes.
The Biggest Influences on Complexity
There are countless complex drivers and several categories one could choose to begin addressing them. The number of drivers each company possesses depends on its size, maturity, globalization potential, and worldwide logistics.
Many studies have focused on different complexity drivers and their impact on supply chain manufacturing. Most brands and companies experience the same several complexities within manufacturing, affecting their carriers’ efficiency and management abilities.
1. Employment and relational environment
Your company's employees and how they handle relationships with their business partners exist within the organizational aspects of manufacturing. These are considered an internal autonomous complexity driver, as it consists of the decisions your company makes. They are decisions about your company's management, the number of contractual partners, and the lengths of your business relationships. These driving forces are related to how your company is organized, how it is managed, and how they communicate with their partners.
A company’s number of employees, the employees’ experience level, and qualifications all create a butterfly effect of complexities that can affect manufacturing. The employees and communication within a company create variables and gaps that can result in mistakes.
A newer aspect of complexity drivers when it comes to employees is the declaration of the Covid-19 pandemic. This situation introduced a whole new set of guidelines for employment and a change of expectation from employees. Employees may feel uncomfortable working where they believe they can contract the virus or be required to quarantine if they think they may have been exposed.
The year 2020 brought new changes to how many employees would be working and perform their jobs. The unpredictability of the pandemic reaction changed the speed of production, the demand for products and consumer packaged goods, and the relationships between employees and business partners.
2. Customer expectations
On a basic level, a company's customer base is constantly changing. There are constant fluctuations in the number and diversity of customers, but the expectations of customers are growing and changing more. Customers are asking for more customization regarding their order sizes, display units, specialized handing, and unique routes.
Customers now expect more individuality with products they buy and have higher needs for shipping and transportation. Two-day and same-day shipping options are becoming more ingrained into the everyday online shopping experience. This expectation influences customers to demand a faster lead time. Providing these transportation services via freight transportation or other methods adds another external complexity for transportation management.
3. Demand and making of the product
The demand for a company’s products is constantly fluctuating, even if it's a minute change. The market, trends, and needs of a customer are ever-changing, and it can be difficult to predict demand for a product. These aspects also change as globalization occurs across products. A big complexity driver occurs when a company operates at an international level, requiring global logistics within worldwide transport.
For instance, getting inbound products from Asia has been a challenge for many companies lately due to container and capacity shortages. There’s a risk of disruption if you utilize suppliers located in areas where products or raw materials are sourced. To counteract this effect, many companies are keeping more emergency stock to offset the unreliable nature of the inbound supply chain.
The expansion of products and their variety is an internal complexity, driven by its design, performance, and quality. Different ways of producing the product change the manufacturing process and can introduce new complexities.
Other aspects of product complexity include the available raw materials to make the product and the number of applied materials. The inventory of these materials may be dispersed across multiple parties within a company, increasing the likelihood of non-synchronized decision-making.
4. Sales and distribution
Though similar to product demand, sales and distribution complexities are more about the decisions made when getting the product out the door and to the customer. These decisions pertain to the stock level in a distribution system and the number of communication systems. The transportation routes, shipping costs, and shipping terms make manufacturing transportation more complex with each step, along with the number of distribution centers a company has.
The weather could change the routes the transportation modes have to take, the communication systems the company uses may have an error, both of which can create miscommunication. If these aspects stay undetected, it could cause disruptions throughout the manufacturing and distribution process.
5. Technological changes
Technology is a factor that affects a company both internally and externally. The progress of technology, its change, and technological standards all play their part in simplifying the manufacturing process, while also bringing additional complexities. The progress of technology affects a company externally. The advancement of the technology may require new materials, leaving room for missteps, as does the possible integration with the technology your company already uses.
Technology evolves with societal changes, legal factors, population growth, and different competitors. Companies must keep up with these changes, using recent advances in dynamic routing based on real-time data and event visibility. Allowing customers to track their items and see dynamic re-routes to avoid local disruptions will enable you to stand out amongst your competitors and stay relevant to your customers. These changes are determined mainly by external forces, but internal forces also constitute their complexities.
Companies consistently acquire new data and need new ways to interpret and consolidate that information. These companies need to adjust to the integration of new technology and IT systems, which sometimes can bring incompatible decision-making within the technology systems. These internal aspects are also significant complexity drivers within technological changes.
6. Communication and control
Communication and planning complexities can arise from any internal process. The number of controlling authorities affects how many directions information is coming from and brings the risk of miscommunication. Strategic planning is crucial in the manufacturing industry, and a lack of planning creates more complexities.
It’s also essential to have control over the processes taking place via communication, and with a longer supply chain, you have to manage each milestone carefully. You can keep track of each step through documentation, and with documentation help and necessity, it is a complexity to handle.
What to do About Complexities
Complexities within manufacturing are not something you can resolve quickly. They are inevitable and sometimes essential in the manufacturing process. Companies will always need employees and customers, and the means to work with both of them. This doesn’t require companies to eliminate the complexities but rather embrace them in whatever ways they can.
Companies may become inadvertently compliant with the complexities of the supply chain, as it gets difficult to monitor each tier of it the longer it becomes. One aspect of the list above might not seem like it holds enough impact if a misstep occurs, though it can affect the process of manufacturing throughout the supply chain.
A standard solution to the disruptions caused by complexities is building inventory. Some companies use this strategy to create a buffer when a change of demand is sudden. This approach to preventing problems is costly, and it can be hard to justify its expense. This is why it is essential to stay vigilant and aware of each complexity. There are tools and technology available to manage crises and predict future complexities where its visibility can prevent disruptions.
Using data analytics and predictive models can help keep track of each step in manufacturing. Developments of new IT infrastructures can analyze product flows and predict problems that may occur due to complexities. Collecting data on carrier management is an efficient way to gain visibility on complexity. Today's technological advancements let companies view an analysis of this data to prevent problems from surfacing in the first place.
Trax Carrier Management Solutions
Taking care of carrier management complexity is crucial not only for the efficiency of product manufacturing but also for customer satisfaction. A communicative supply chain that is aware of its complexities helps the company stay cost-efficient and reliable, and keeps your customers both loyal and satisfied.
Carrier Management Services by Trax helps strengthen your relationships and communication with your carriers. Trax is dedicated to solving the complexities of global transportation spend management, and with our carrier management services, we can deliver end-to-end customer satisfaction.
Trax can help your company identify the root causes of processing and billing issues. Becoming more efficient is a continuing process and necessary if you want to mitigate the impact of rising costs across the board. Once you isolate and solve the most pressing issues, your company can become proactive in ensuring the complexities of communication will not cause a recurrence of these problems.
As a company, you can also resize cumulative gains in performance, data quality, and financial insight. Trax Carrier Management’s technology and tools are there to help with on-time delivery and loss recovery, to create a sufficient increase in customer satisfaction. Identifying and embracing the complexities of carrier management can be challenging to master. Still, with today's technology and with Trax, you can say goodbye to disruptions caused by carrier management complexities.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.