A shipper-carrier relationship is at the core of a logistics program. To make things available to the end customer at the right place and the right time, you—as a shipper—depend on a carrier. At Trax, we use ‘carrier’ as a term that also encompasses logistic service providers (LSPs) and third-party logistic providers (3PLs).
Shippers often work with several carriers to transport goods to multiple destinations, sometimes even globally. You need an optimized carrier management solution in order to grow your business and remain competitive.
The Definition of Carrier Management
Carrier management is a division of transportation that enables businesses to monitor and manage carrier performance through carrier scorecards, contract and rate management, and claims management. It offers visibility via analytics, aids in critical business decision making, and improves collaboration with your carriers.
We view carrier management as an important component of the Trax Transportation Spend Management (TSM) Maturity Model. This model is a framework that provides a roadmap for large, global enterprises to go from a lack of visibility and control to a fully optimized and accurate data-based transportation supply chain.
Effective carrier management helps you to both reactively and proactively manage your carriers’ performance and relationships with greater confidence and lower disruptions to your business objectives. In other words, you get an agile supply chain with enhanced future-proofing and better response to transportation issues that may arise.
Importance of Carrier Management
It’s crucial to assess your transportation spend management scalability in order to accommodate your business’s growing needs. Carrier management is an essential aspect for companies that have grown beyond needing more than just freight audit and payment (FAP) solutions for their broader scope of operations.
A freight audit and payment platform includes invoice processing and payment automation, eliminating duplicate invoices, accruals on bills received but not paid, etc. Basically, freight audit helps to find a dispute and report it. However, when a business has matured, the needs extend beyond just the basic FAP services. It’s essential for seasoned businesses to grow to more comprehensive and efficient carrier management and financial management.
Carrier management encompases three critical functions that fortify your business with better efficiency and significant cost-saving opportunities.
- Carrier scorecards—A carrier scorecard is a tool that helps breakdown carriers’ qualitative and quantitative attributes to evaluate performance through predetermined KPIs. The KPIs that your company selects to align with your business objectives help assess carriers on a monthly, quarterly, or yearly basis. Some examples of KPIs include: on-time pickup and delivery, invoice accuracy, and data quality. Using insights from carrier scorecards helps build strong relationships with your carriers—you gain visibility into processes for both you and your carriers. At Trax, we believe that “you can’t control what you can’t see”, meaning that data and visibility aids in improving efficiencies, achieving optimization, and directly impacting the bottom-line.
- Contract/rate management—Comprehensive carrier management also focuses on contract compliance. Trax helps you optimize your processes and ensure contract compliance for better control of your transportation costs. Invoices that align with your contract terms are crucial—fees and other charges that don’t align with your contract are money wasted. Because every company’s needs and transportation logistics are unique, personalization of your carrier management solution is vital. For example, Trax consults with our clients on the types of relationships that you want to build with shippers to maximize performance, boost your customers’ experience, and minimize costs and risks.
- Claims management—Claims handling and resolution is often more important than businesses realize. Efficiently handling disputes and claims is necessary for your customers to have a good experience. For instance, when your customer orders a product and doesn’t receive it, your company ships it again in favor of customer service. But, that leaves your company with the tedious process of claim resolution: finding the shipping notification, bill, or other documents to prove the cause of error, submit it all for review, etc. Often, such instances are written off as a loss, which is an additional cost for the company. Over time, it adds up to major financial losses.
A more mature company, on the other hand, would file the claim and then have dedicated staff to recover such losses. However, that often becomes an operations efficiency problem. Now take a company that is fully matured and optimized in transportation spend management. Such a company eliminates mistakes and increases accuracy in the verification processes. We pride ourselves at Trax in being able to offer this level of maturity so you have faster and successful claims resolution. This frees up your resources and funds for other tasks important to your business, and also helps you to continue prioritizing a great customer experience.