Four Ways Food & Beverage Companies Benefit from Transportation Optimization
Shippers and logistics providers in the food and beverage industry continue to adopt more advanced transportation management software, but many are not taking full advantage of optimization tools. Companies rightly start the first leg of their TMS journey focusing on execution to enable process automation. Optimization is typically a second leg in the journey and often gets left out.
The traditional deployment model of TMS is partly to blame. When the software is hosted on premise, optimization may require a separate module with significant up-front and ongoing capital investment. Perception is also a barrier to adoption, especially among small companies that believe a large volume of shipments is prerequisite for a return on investment.
The cloud computing model has removed these and other obstacles. Companies of all sizes can now access high performance software with optimization tools that are integral to the planning and execution process. The “optimization on demand” trend of cloud-based TMS is giving companies in the food and beverage industry a second chance to make improvements in the following areas, regardless of size or previous experience with the technology.
Private fleet and carrier selection
Shippers and logistics providers with their own assets have traditionally used different TMS solutions for two distinct purposes. One, is to maximize the utilization of private fleets and minimize total distance and fuel costs; the second is to select common carriers by identifying the lowest rate in each lane.
Simultaneous optimization of inbound and outbound with additional opportunities for leveraging backhauls and minimizing deadhead miles makes the ROI even more attractive for organizations. Optimization also can add tremendous value with the direct-to-store delivery model. The ability to immediately plan and execute consolidated shipments to save costs while maintaining a high service level is a differentiator for many small and medium-size businesses that are emerging in fast-growth markets like health foods.
Transportation management extends beyond the walls of a single enterprise, and cloud-based TMS platforms have an inherent advantage for exchanging information between trading partners.
A major selling point in the food and beverage industry is sustainability. Companies can help reduce their carbon footprint and document the results using optimization tools.
One approach is to use a carbon tax as an accessorial charge. The optimization engine consider this with other variables to minimize transportation cost. Another approach is to use distinct factors by mode of transit (LTL, rail, ocean, air, etc.).