Spot Tendering: Are You Prepared for Capacity Shortfalls in Your Transportation Operation?
With the recent hurricanes that have hit Florida, Texas and Puerto Rico, we’ve seen another practical example where assumptions on carrier capacity are challenged at inopportune times. Symptoms of those disruptions include carriers, who have traditionally been reliable, more frequently rejecting the loads they’ve been offered. Large corporations are also hedging on securing capacity, creating more capacity challenges in the marketplace. For example, major retailers have recently started to secure large amounts of capacity to ensure they can deliver goods from mid-November through Christmas. These capacity crunches, at times, force carriers not to adhere to capacity commitments with customers, resulting in companies having to go out into the market to find alternate transportation options. This typically corresponds with a more expensive transportation choice in an expedited manner. It’s important to be prepared ahead of time in these types of circumstances so you can proactively react.
Tips for Preparing for Dynamic Capacity Adjustments
In order to prepare for capacity changes, you need to proactively secure capacity, recognize and reward the more reliable carriers and minimize your exposure. Using JDA’s Transportation Management System (TMS), you can minimize spot market cost increases and find cheaper alternatives for uncovered loads. Additionally, you can get better, automated coverage of alternate carrier options given rejections by primary or secondary carriers on a lane. With JDA’s TMS, you can enable real-time visibility directly within your instance to get better observation of load coverage and problem areas in the network.
Carrier Scoring for Your Next Bid Process
JDA’s TMS provides the ability to robustly optimize carrier capacity and cost simultaneously, which allows shippers to choose the best rates for loads within capacity commitments by carrier, maximizing positive carrier relationships and minimizing costs. JDA’s TMS also audits tender compliance from carriers based on metrics, such as carrier acceptance rates. The solution can observe primary tendered carrier auditing, such that carriers that were rightfully offered freight given their capacity commitment, then reject the load, are tracked for contract compliance. Additionally, load history and carrier compliance information can be shared automatically from JDA’s TMS to Logistics Procurement for transportation procurement bid preparation and analysis for future procurement cycles.
We suggest the usage of JDA’s Transportation Modeler to model the transportation network flows and costs given capacity disruptions and to have “alternative playbooks” ready in case capacity from carriers dries up in certain regions or lanes. You can then seamlessly position these new strategies into production environments based on the best results that minimize disruptions and cost in the network, while still meeting customer service commitments.
How JDA Can Help
In these types of circumstances, are you prepared? JDA’s TMS can help with spot tendering and movement of data that spot tendering causes. Contact JDA to learn more.