Tap Your Wealth of Data for Improved Logistics Management

Every shipment is a font of data — use it!

 

This week and next we’ll be discussing concrete ways you can use the wealth of data in your operation to improve your logistics management. This is part 1.

Information has become an essential element in competitive differentiation, and fortunately for logistics companies, every shipment is a font of data — information that can be used to improve both operational efficiency and customer experience.

The traditional means of using data analytics is to confirm decisions already made. But if logistics firms want to drive forward and avoid stagnating in a status quo that will soon see them dropping behind the competition, a shift in mindset is needed. Deriving accurate insight from data is the foundation for effective decision-making.

For forward-looking decisions, companies can use data analysis in two main ways:

  • Strategic planning: This looks at the long-term structure of the distribution network, considering aspects such as warehouses, custom-built vehicles, and other investments with long requisition and authorization cycles.
  • Operational planning: This forecasts network flows based on real-time data, enabling the daily or monthly scaling of capacity up or down.

Deploying data analytics for strategic planning can lower the risks of investing in storage and fleet capacity; consider seasonal factors and emerging freight-flow trends; generate market intelligence segmented by industry, region, and product category; reveal supply chain risks and provide resilience against disruption; among other benefits.

In terms of operational planning, the list of ways in which precise data analysis can be used to improve logistics management and customer experience is long. A few examples: more precise capacity forecast and resource control, gaining individual customer insight and creating targeted customer value, ensuring sender and recipient satisfaction, continuous service improvement and innovation, optimized work schedules.

Of course, the more precise the analysis and the more relevant the data, the more accurate will be your insights driving future decisions. So how do you capitalize on the value of your data?

  1. Increase Profitability

Shipping and supply chain expenses typically have the greatest impact on profitability. How much does it cost to service each customer? What do you need to measure to identify that cost? Can you set accurate benchmarks for that cost? Identifying these cost factors and establishing baseline measurements are the first steps in understanding how and where you can improve the margin on each shipment. This is particularly critical in an environment where customers expect free or very low cost shipping.

Measuring freight cost as a percentage of sales is a way to identify potential low-margin or money-losing customers. Other customer-specific costs such as accessorials or additional handling are often not tracked or well understood, nor considered on a per-customer basis. Each of these is an area where data analysis can help you improve margins.

Information can be used to support strategic business decisions like comparing different shipping scenarios, or optimizing the location of suppliers and manufacturing and distribution points. Tap the data of shipping history to analyze the impact on logistics costs of changing suppliers, or the potential benefits of adding an additional fulfillment warehouse.

Data can also bring to light hidden inefficiencies in logistical processes and simplify and speed up decision making to enable swifter response to customer demands or market changes.

There are a multitude of other benefits you can gain from digging into your ever-growing pile of data. In part 2 of this post, we’ll explore two additional ways companies can use data from their logistics operations to benefit the whole company.

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