To some shippers, the utilization of freight carriers has been a called a “necessary evil.” “We make stuff and we need to ship that stuff.” Shippers with this attitude, and there are many, enter the marketplace with the perception that there really is no difference between the various carriers serving their company. To them, the only real thing separating one carrier from the other is price.
The main reason for this thinking which has existed for decades, (and will continue to go on forever), is the fact that many of these shippers have not placed any real value in the services their carriers provide.
Let’s be honest here, pricing is important, but it cannot be the most important deciding factor in selecting the best carriers to handle a shipper’s business.
So we recommend a change in how shippers not only view their carriers, but more importantly how they measure the true value of the services being provided by those carriers.
Shippers need to be more strategic in the carrier evaluation process by looking beyond traditional cost-cutting and establishing several carrier selection initiatives to comprehensively evaluate how best to select and interact with their freight carriers for long term joint business success.
- Determine appropriate Goals AND share those goals with the carriers
What are the shipper’s goals in establishing a relationship with a specific freight carrier? Share those goals with the carrier or carriers. Does the carrier have the ability to meet those goals? If not, it’s time to move on; and don’t just take the carriers word that they can meet the required goals, perform your own due diligence.
- Set targets for key performance metrics
If the shipper’s due diligence has been successful and there is true confidence in the carrier’s ability to perform to the goals set out by the shipper, the next step is to create key performance metrics to continually measure all of the service attributes of those carriers. This includes on-time performance, zero claims initiatives, accuracy of billing, prompt problem resolution, easy to do business with and any other metric a shipper feels is necessary to track total performance of their carrier partners.
- Measure variances over time
Once shippers start to monitor all of the key performance metrics they have established for their freight carriers, they usually find that the carriers are spot-on target out of the gate, but over time things begin to splinter and this is where relationships quickly come to an end. It’s usually not a total meltdown across the board but small indications that somewhere along the line, focus has been lost. And if that’s the case, shippers and carriers must nip it in the bud to make sure this little pimple does not become a huge boil. Gut feelings are so critical in evaluating what’s going well and what isn’t. Therefore, be sure to trust you gut.
- Implement best-in-class scenario’s
So, at the outset of these business relationships, it’s important for both shippers and carriers to establish exactly what best-in-class actually looks like. Remember, to really be successful in establishing and maintaining best-in-class business relationships for the long haul, (no pun intended), both the shipper and carrier must be involved. Both sides must be intimately involved in establishing exactly what they both agree best in class actually is; how it will be measured and should things start to go off the rails, how both parties will work to reverse the trend and get back on track for a truly successful long term business relationship.
How successful are your company’s carrier relationships? Can they be better, should they be better?
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