Discover how to minimize costs, reduce carbon footprints, and enhance efficiency by tackling the often-overlooked challenge of empty miles.
Discover how to minimize costs, reduce carbon footprints, and enhance efficiency by tackling the often-overlooked challenge of empty miles.
Imagine you’re a manager entrusted with logistics planning for a shipment. You meticulously crafted an optimal plan for forward shipping logistics, ensuring all shipments are fulfilled efficiently while minimizing unnecessary costs. Initially, everything seemed successful, with all deliveries completed on time. However, there's one crucial aspect you overlooked in logistics operations—empty miles.
Empty miles refer to the distance traveled by vehicles without carrying any load, leading to increased freight costs and a higher carbon footprint.
According to the Owner-Operator Independent Drivers Association Foundation (OOIDA), the average owner-operator in the U.S. experiences 19.93%, or 14,075 miles, per truck of deadhead or unloaded miles.
A logistics manager must have a backhaul logistics management plan. A hallmark of a robust supply chain plan is its ability to handle backhaul logistics and accommodate any ad-hoc shipment changes.
However, logistics managers often face multiple challenges: Cost concerns, multi-leg shipping routes, various modes of transportation, inventory management, distribution strategy, warehouse optimization, on-ground constraints, and business goals.
Is there a way to build an efficient logistics plan for the supply chain? Yes, and this no-nonsense guide provides logistics managers with strategies for intelligent logistics planning.
Effective logistics strategies for streamlining your supply chain logistics
1. Identify your goals
An enterprise aiming to attain high profit margins must be clear about its goals. Without clear goals, measuring, monitoring, and optimizing logistics operations is difficult. Therefore, identifying your goals is the first step toward creating an intelligent logistics plan. These goals should encompass both short-term and long-term objectives.
The question then arises: which goals should you prioritize?
Some enterprises prioritize delivery speed over operational costs, while others may focus on cost efficiency over customer experience. Some companies aim to improve predictability and reduce service level agreement (SLA) breaches. Additionally, others may focus on reducing carbon emissions in their supply chain.
Every goal has its pros and cons, and businesses can assign weight to each goal based on their short-term and long-term priorities.
Here are a few goals for intelligent logistics planning that enterprises can choose to focus on:
🔸Improving SLAs and first attempted delivery rates (FADR)
🔸Eliminating paperwork in order management processes
🔸Enabling real-time communication internally and externally
🔸Building dynamic route plans that accommodate ad-hoc order requests
🔸Elevating customer experience without compromising profitability
🔸Maximizing capacity utilization and reducing vehicle downtime
🔸Improving warehouse processing speed and reducing detention time
🔸Aligning with environmental, social, and governance (ESG) regulations
🔸Enabling real-time visibility of on-ground logistics operations and avoiding data silos
🔸Enhancing carrier selection, tracking, and contract reconciliation
🔸Facilitating timely data sharing internally on critical performance metrics
🔸Minimizing drivers' time on the road and distance covered for deliveries
🔸Setting accurate and realistic expected time of arrival (ETA) targets for customers
When businesses don’t prioritize intelligent logistics planning, it leads to:
🔹Inaccurate deliveries
🔹Suboptimal resource utilization
🔹Difficulty in managing delivery exceptions and supply chain disruptions
🔹Higher freight costs
🔹Increased carbon footprint
🔹Inflexibility in handling reattempted deliveries and time slots
🔹High transportation costs
🔹Poor last-mile customer experience
🔹Regulatory compliance issues
🔹Increased warehouse and inventory management inefficiencies
By clearly identifying and prioritizing these goals and challenges, enterprises can develop a more effective and efficient logistics plan that aligns with their overall business strategy.
2. Achieve visibility
Real-time visibility serves as the magnifying mirror for logistics operations. Imagine you’re a fleet manager overseeing the logistics of 5,000 orders. Some vehicles have broken down, certain delivery zones are experiencing delays, and you’re dealing with an increasing number of "WISMO" (Where Is My Order) calls from customers.
Unfortunately, you were informed of these issues an hour too late. The common thread in these problems is a failure in real-time visibility.
Every missed, canceled, or failed delivery can significantly inflate costs. The optimal way to manage these costs and streamline logistics operations is by achieving real-time visibility. With real-time, end-to-end visibility, logistics managers can swiftly address disruptions, delivery exceptions, and potential delays before they escalate into major losses.
Real-time visibility allows businesses to map their supply chain, fleet capacity, and assets, and plan for all possible scenarios.
For instance, consider the upcoming holiday season. A logistics manager needs to plan and secure fleet capacities well in advance. Even if a logistics operations business owns the fleet, driver availability might be limited. Alternative plans must be developed to handle logistics during this peak season, potentially involving a hybrid fleet strategy that includes outsourced, contracted, and owned fleets.
Real-time visibility is the most critical foundational element for building a robust logistics plan. Whether maintaining stocks in retail outlets or scheduling manufacturing processes for distribution, visibility is the engine that guides businesses in making the right operational, tactical, and strategic decisions.
3. Strategize and monitor
There is no one-size-fits-all approach, logistics strategy, or fix when it comes to building an effective logistics plan. Every business managing its supply chain needs to develop a custom logistics strategy. This strategy varies based on each business's goals, constraints, priorities, industry vertical, sub-segment, customer demand, seasonality, requirements, and scenarios.
After analyzing shipment data and optimizing for an efficient logistics plan, a business must rigorously monitor and predict outcomes to determine if the logistics strategy is working. Imagine you're a logistics manager aiming to elevate the customer experience and achieve sustainability in operations without compromising profit margins and efficiency standards.
You need to track metrics related to customer experience, efficiency, and profitability, such as cost per mile, unit economics of deliveries, delivery ratings, the number of cancellations and reattempts, and On-Time In Full (OTIF) scores.
Achieving this requires support from technological platforms that can digitalize, optimize, and automate logistics processes. Businesses need to make the right decisions regarding a multi-modal transportation management system (TMS) to optimize their logistics operations.
Selecting the right TMS is only part of the equation. The true transformation from cost-saving to revenue-generating logistics lies in how the solution is integrated into the existing tech stack and managed during the change process.
4. Reassess, refine, and reinvent
A robust logistics plan should be dynamic, not static. This means it must adapt to changes based on business goals, long-term plans, market conditions, on-ground constraints, and other factors. This adaptability, or strategic resilience, is crucial for a logistics plan to remain effective.
To achieve strategic resilience, businesses must continually reassess, refine, and reinvent their logistics plans. This process relies heavily on data.
There are two approaches to using data in decision-making: data-driven and data-informed. Data-driven decision-making is entirely based on data, while data-informed decision-making incorporates data as one of several factors, alongside experience, expertise, intuition, and external analysis. Experts in logistics suggest that businesses should primarily rely on data-driven decisions. However, when faced with high uncertainty, randomness, and volatility, shifting to data-informed decisions becomes critical.
Data-driven decisions help businesses streamline processes and ensure continuous improvement. For example, suppose there's a plan to use electric bikes for last-mile deliveries to cut carbon emissions by 25% and improve profitability by 35%. If, after implementation, costs increase by 14% and carbon emissions are reduced by only 10%, the plan needs to be reworked. This demonstrates the necessity of a cycle where plans are continuously reevaluated based on data,
leading to strategic adjustments as needed.
To maintain a resilient logistics plan, businesses should:
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- Reassess: Regularly evaluate the effectiveness of the logistics strategy against current business goals and market conditions.
- Refine: Use insights from data to make incremental improvements to processes and strategies.
- Reinvent: When necessary, overhaul existing strategies to better align with long-term objectives and evolving market dynamics.
By embracing this cycle of reassessment, refinement, and reinvention, businesses can ensure their logistics plans remain flexible, efficient, and aligned with their strategic goals.
5. Plan for different scenarios (especially contingencies)
Planning for different scenarios is crucial in building a robust logistics plan because it equips businesses to handle various uncertainties and disruptions that can arise in the supply chain. By anticipating potential challenges such as weather conditions, equipment failures, sudden spikes in demand, or geopolitical events, logistics managers can develop contingency plans that ensure smooth supply chain operations even in adverse situations.
This proactive approach allows for quick adaptation, minimizing the impact on delivery schedules and customer satisfaction. Moreover, it helps in optimizing resource allocation and cost management by preparing for both best-case and worst-case scenarios, thereby reducing the risk of unexpected expenses.
Additionally, scenario planning enhances strategic resilience, making the logistics plan more flexible and responsive to change. This adaptability is essential in today's fast-paced business environment, where market conditions and customer expectations can shift rapidly.
By regularly reassessing and refining logistics strategies based on different scenarios, businesses can stay ahead of their competitors, maintain high service levels, and improve overall supply chain efficiency. This continuous improvement cycle not only strengthens the logistics network but also aligns it more closely with long-term business goals, fostering sustainable growth and profitability.
The Silver Bullet?
The truth is that there is no silver bullet for building a foolproof and robust logistics plan. What works for one enterprise may not work for another. Creating an effective logistics plan requires well-identified goals, end-to-end visibility, a customizable strategy, scenario planning, and continuous reevaluation. It is a trial-and-error process that demands integrated tracking and unified data sharing.
While you now understand the process of building a robust logistics plan, one crucial piece remains—technology. The key question is: what technology can help a logistics manager create a data-driven logistics plan?
The answer lies in a multi-modal transportation management system (TMS). A multi-modal TMS enables an enterprise to develop a comprehensive logistics plan that incorporates air freight, water freight, and on-road freight. When considering an investment in a multi-modal TMS, an enterprise should evaluate whether it is scalable, flexible, agile, easy to integrate, cost-effective, and secure. Additionally, it should offer a low time to value, ease of use, high ROI, and responsive customer service.
Still unsure about how to select the right multi-modal TMS solution? Schedule a demo with our experts.
