Digitise, Automate & Review – Route to Transport Optimisation
As a brand owner or a distributor, a transporter plays a key role in connecting ordered material to the customer. For a large number of businesses who have
- a large customer base and
- spread across the nation
It is a complex undertaking in terms of making sure the right product reaches the customer at the right time and in the right condition. For instance, one of our clients dispatched ~2L boxes in 6 months from Oct 2019 to Feb 2020, through 12 different transporters. This was just for their B2B business. The numbers get complicated by following additional factors
- Whether we are doing express/courier or FTL for a customer or multiple orders into a single vehicle (LTL consolidation)
- How technology savvy are the providers e.g. do they provide APIs or not?
- Whether this is a B2B delivery or a B2C delivery
In providing our services, we have faced these issues on an everyday basis and have tried to capture the specific questions we ask ourselves to evaluate the quality of freight service we are offering to our clients. These are the following key questions:
- SLA of service being provided by the transporter
- Identifying the true cost of service being charged
- Real time tracking and proof of delivery
- Reconciliation of handed over and returned boxes
- Comparing multiple providers
If we delve deeper into the questions, each of them has a story to tell on its own.
SLA of service being provided
There are multiple factors which define the SLA
- Pin code coverage including ODA, OPA etc.
- Turnaround time (TAT) for specific pin codes
- Performance over time e.g. compares SLA across months, quarters, years etc.
Vendor masters capture detailed information of the service being offered, at a pin code level. This can also be updated easily as the business scenarios change e.g. new pin codes are added by a vendor as part of the service
Identifying the true cost of service
Even the simplest transport contract for a courier has multiple factors
- Basic cost per kg
- Fuel surcharge
- Docket surcharge
- ODA/OPA charges
- Volumetric weight calculation
- Minimum cost per docket etc.
Within FMS, we have built multiple rules and configurations to capture different business scenarios which help in automatic capture of a large number of invoicing variables.
Real time tracking and proof of delivery
From a customer perspective, real time tracking and expected time of delivery is most crucial. This forms a critical part of service metric.
From an internal team perspective, revenue recognition can happen once goods have been delivered to the customer. Delayed POD has a significant impact on quality of financial reporting.
We have enabled tracking till delivery (for forward as well as reverse pickup); if the transporter does not have adequate technology setup to manage the same, they can use the FMS app to do real time tracking.
Reconciliation of handover and returned boxes
Coming back to our example earlier, our client dispatched ~20k boxes over a 5 month period. With multiple handover points ensuring that at the end of the month all the boxes are accounted for (with customer, returned or in-transit) is important to ensure store shelves are stocked and timely recovery of receivables. The problems can be at various points:
- Partial handover to transporters
- Incorrect handover to transporters
- Partial or non-delivery to customers
- Incorrect delivery by transporters
Our system takes individual dependence out of the process and entire work flow from handover to delivery tracking is either guided or managed by the system. User for any given time frame, can check the final status of all boxes created in the warehouse allowing him to take quick appropriate actions at the warehouse or with the transporter
Reconciliation of invoices
Ask any transporter their biggest business concern and it is highly likely that you will get delayed payments or working capital block as the answer. On the other hand speak to a client and their biggest problem is validation of invoices – dispatch, delivery, weight and pricing. At most organisations there is a lot of friction between operations & finance as well as operations and transporters when it comes to invoice reconciliation and payments. Our endeavour is to completely automate this process. Given the automated nature of transporter selection including pricing, clients can generate an invoice report from the system which can be validated by the transporter for payment. This significantly reduces client bandwidth while transporter has high incentive to quickly close the loop thereby allowing a relatively frictionless invoicing process.
Comparing against multiple providers
This is where it becomes most complicated. On the minimum, most clients use at least 2 providers. On the higher end, they end up using 10-12 providers. Every provider has their own format & checking and comparing across providers is close to impossible. What that means is that taking data driven decisions is impossible e.g.
- Which provider has best SLA?
- Which provider has most accurate costing?
- How has the performance of a provider changed over time etc?
Freight Management System (FMS) has been built as part of our Maven suite to help us and our clients answer these questions based on data. Happy to discuss any problems you have seen in your business/experience.