Becoming a Shipper of Choice: Best-In-Class Carrier Strategy

However, it is possible to find one functional area within the supply chain group, or possibly a separate department altogether is working diligently to support a strategy that conflicts with making improvements in the supply chain.

A great example of this conflict often comes from a department connected to the supply chain. A procurement group within a commodities division had an initiative to maximize margins on the sale of their products, which is not an uncommon goal for such a department. Profitability is the reason a business stays in business.

What this meant for the transportation team was that they were finding themselves challenged to manage a dramatic spike of short lead-time orders, often same day. This ended up driving an increase in spot market utilization and over time was eroding carrier relationships, which led to increased transportation costs and lower service levels. The net result:

The increased transportation costs exceeded the increased margins by procurement.
Overall, there was a huge negative impact on initiatives of the business. The Account Managers and CSR group were focused on improving their customers’ experience but were unable to due to fluctuations. Procurement may have increased margins, but it provided poor service and ended up costing the business’s bottom line.

When an initiative gets under way, everyone needs to be at the table.