Better data, better systems, better freight decisions

In this blog, we explore the power of data analytics and how it is helping uncover metrics, trends and areas of improvement in freight and logistics operations.

15 December 2020       Blog

Having access to good data has become a fundamental requirement across multiple areas of business for better decision making. Get it right and you gain the visibility to make smarter, more profitable decisions. However, achieving these benefits isn’t easy if you don’t have the right tools at your disposal.

In this blog, we explore the power of data analytics and how it is helping uncover metrics, trends and areas of improvement in freight and logistics operations, sharing how organisations like yours are tapping into this rich source of intelligence to turn freight into a competitive advantage.

Mining your data in distribution

Let’s begin with a look at two of the key challenges that come with accessing data insights, and a quick overview of how you can overcome them.

Real time data insights

Traditionally, gathering data has been a rather onerous and time-consuming task. Before you can draw out trends and make recommendations based on your data, data sets must be combined across multiple, disjointed sources. Often, by the time this is done, the data is out of date and the time to make an impactful decision has long passed.

Business intelligence solutions solve this by pulling together data in real-time. This gives you access to a key set of metrics that can enable users to measure scenarios, avoid costly events and even set up alerts to let you know what is happening right now.

Unifying disparate data

Perhaps one of the biggest challenges to any business today is the sheer amount of data generated every day via multiple, disparate business systems – warehouse management, eCommerce, CRMs, and ERPs, to name a few. Having access to isolated data offers only a small glimpse into a business. To provide a full and realistic freight picture, business intelligence solutions need to aggregate and normalise data from many sources - including order details, bills of lading, shipment documents, and carrier invoices - to create a single view and true cost of logistics across the business.

Finding answers to critical logistics questions

We’ve spoken previously about the importance of integrating your systems to save your staff time, reduce your costs and ultimately optimise your entire end-to-end freight processes. Data is the critical piece of that puzzle.

Once you have all your data together and accessible in real-time, what type of insights can you expect? There’s quite a lot of information that can suddenly be accessed at your fingertips, in fact. Here’s just a small sample of the business problems you’ll be able to address in seconds:

What’s the cost of freight to sales?

This is a simple but key ratio that is both measured as part of a logistics or warehouse manager’s performance and as a key business target. For example, if you did $100,000 of sales last month, what percentage of that was spent on freight? Typically, it hovers between 3-10%, but knowing your ratio is the first step to improving it.

What’s the cost to serve different customers?

Consider an organisation that serves three leading hardware stores, each with different ordering models - some are direct to store (once or multiple times a week), others go through a centralised distribution centre. For the former, that could mean distributing goods to 300 stores across the country, whereas the latter allows for bigger, more cost-effective shipments to capital cities.

The cost of servicing these customers is clearly going to differ, so it makes sense that you’d want to have these insights at your fingertips, particularly during contract negotiations. Without them, we’ve seen organisations lose money because they simply can't see the impact of their service model in the data.

Another contributor to the cost to serve customers is the type and volume of your freight. We worked with one large manufacturer who was struggling to understand why their costs were increasing, despite their overall orders remaining consistent. By turning to the data, they discovered that the volume per consignment was dropping. This meant they were sending far more regular and smaller packages at much higher cost per consignment than a palletised approach.

In a similar vein, a large electronics company took a closer look at their data to discover they were losing serious money shipping air. Not shipping by air, but actually shipping air. A huge proportion of their boxes had a lot of empty space and they were paying by the size of the box. By simply changing the size of their packaging to better fit their products, they saved significant money across the course of a year.

How can I catch warehouse errors?

Real-time measures can give you unprecedented control over your warehouse, particularly if you introduce some basic automation or alerts.

For example, we’ve seen mistakes made where a pallet is accidentally scheduled via expensive airfreight, rather than the more cost appropriate truck carrier. Once it leaves that afternoon, it's almost impossible to undo and generally, the first time you find out about it is once it's completed its journey and you get billed for it. However, an alert that triggers when a consignment is raised worth more than X amount of dollars will allow this shipment to be checked and corrected before the freight goes out the door.

How – and why – are freight costs changing over time?

Business intelligence solutions aren’t just about knowing what is going on in the here and now. They can also be used to understand what’s happened in the past and why. By adding historical data from different sources, businesses can begin to see trends across a wide range of areas such as shipping costs over time, or even costs for different warehouses, cities and offices. This same rich history of data can be used to run scenarios and predict costs across locations. Information like this can be so powerful. Business leaders don’t have to rely on gut, they are suddenly empowered to answer questions in full, and innovate solutions to reduce any resulting costs.

How many shipping support tickets do we have open?

Looking deeper into areas like this can allow you to make customer satisfaction improvements. Business intelligence can show how many tickets are open at any one point in time, if it’s a trend that’s been changing over time, and if the ratio of inquiries to shipments is increasing. Armed with this insight leaders can quickly pinpoint customer service issues, and how they can be corrected.

What areas can we reduce costs?

The cost of shipping varies widely by location. For example, a warehouse in New South Wales can ship an item within that state for very little compared to, say, the Northern Territory. To understand the material impact on costs versus different freight options, business intelligence solutions allow you to scrutinise large data sets, test hypotheses and run scenarios to break data down into bite-sized meaningful pieces of information, and eventually uncover the right approach to balance cost and timeliness.

How many parcels were delivered on time in full? What is my total cost of freight this year compared to last year? What’s the average cost per cubic metre? By leveraging data analytics, these types of questions can be answered at-a-glance, and significantly influence your business decisions.

Interestingly, for many organisations their biggest receiver of freight is themselves as they shift stock around the country. In instances like this, your data can be used to run scenarios to identify cost savings. For example, you can quickly understand the impact of establishing a warehouse in Perth to ship all your consignments from.

The vehicle to turn data into insight is here

This may all sound complex to achieve, but it’s easier than you think. Cario, Freight People’s freight management platform also allows powerful data analysis to be done virtually out of the box. It comes loaded with reports and capabilities that require no customising, just instant insight and the ability to interpret and make decisions based on what's in front of you. There’s no need to wait weeks for your departments to submit information via spreadsheet, or spend hours consolidating and analysing the results - your data will be at your fingertips in real-time, ready to slice, dice and filter with just a couple of clicks.

If you’d prefer to utilise your existing BI platform, our team can help you turn your freight data into value by consolidating your freight data to start extracting insights.

Get in touch today to learn more, or take your first steps towards realising the power of your data.