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While “strategic collaboration” is a commonly used catch phrase these days, it clearly is a significant practice occurring shipper-to-shipper and between shippers and logistics providers.
NASSTRAC will soon release its Freight Transportation 2013 Report; a study that identifies shippers’ perspectives on emerging trends in the freight transportation industry. It addresses the practice of strategic collaboration, along with other topics such as carrier relations, mode selection, outsourcing, technology and sustainability. We’re seeing many transportation executives with larger companies attribute their shipper collaboration with other divisions or subsidiaries shipping freight within their larger parent company.
Nearly 130 shippers participated in the study, making it statistically valid – and judging by the number of participants practicing collaboration, it’s a valid emerging trend. Of those participating in the study, 32.4 percent of shipper respondents collaborate with their providers, and an additional 54.9 percent say they collaborate with other shippers as well as providers.
So why is collaboration so valuable? During collaboration, shippers find most efficiency and productivity gains in network optimization (38.6 percent) and mode shifts (31.6 percent). A modest number of respondents find gains in technology investments/enhancements (21.1 percent), reducing transit times (18.4 percent), private fleet strategies (17.5 percent), reducing inventory (17.5 percent), and last-mile strategies (13.2 percent).
In fact, NASSTRAC recognizes companies that have demonstrated excellence in transportation and logistics strategies through its annual “NASSTRAC Shipper of the Year” awards program. Recipients of the last five consecutive years of this prestigious award gained such recognition due, in part, to their strategic collaboration with providers to effectively manage their transportation and supply chain activities.
In 2012, big-box retailer Best Buy Co. was recognized because it cut its price per shipment by 30 percent in its first year of an innovative store remodel strategy, in part, through close collaboration with its providers.
In 2011, fashion retailer Stein Mart received accolades because it re-engineered its transportation and delivery from domestic vendors to stores, resulting in a $20 million dollar savings each year.
In 2010, flooring and cabinet manufacturer Armstrong World Industries brought much of its transportation back in-house and did significant work to re-establish appropriate carrier measurement to experience cost savings.
In 2009, building systems manufacturer USG Corp. developed processes that put fuel costs in check, made carriers more accountable, maintained carrier acceptance rates at record-highs, and elevated customer satisfaction in a short period of time.
And in 2008, home-improvement retailer Lowe’s raised the bar on performance metrics with its core carriers to capture significant supply chain savings.
Clearly, strategic collaboration with providers can have a powerful impact on meeting overall transportation and supply chain goals.
Unfortunately, NASSTRAC’s Freight Transportation 2013 Report found there are barriers that currently prevent effective collaboration. Shippers participating in the study identify a number of challenges, including corporate culture barriers (21.3 percent), opportunities to improve efficiencies in-house instead (17.2 percent), legal/non-disclosure issues (14.8 percent), and economic considerations (13.9 percent). Just 13.9 percent of respondents claim there are no current barriers to collaboration.
To download a free copy of NASSTRAC’s Freight Transportation 2013 Report, visit NASSTRAC.org.