DC Velocity - April 2010

acrossthedock

there’s more to outsourcing than just low rates

Re: “pay for performance,” February 2010

What’s the lasting lesson of 2009? For many, the biggest supply chain lesson from last year’s economic challenges was that low rates will only get you so far.

Many shippers experienced some of the most favorable transportation rates in 2009. However, in reality, these low rates established a competitive advantage for no one. Most shippers are still faced with challenges on several fronts. Some of these more vexing challenges include:

; Cutting costs through greater efficiency and increased productivity

; Staffing—keeping and/or accessing relevant supply chain expertise

; Obtaining visibility and actionable intelligence through IT systems

; Compliance and risk mitigation

; Responding to changing conditions without adding resources

; Maintaining supply chain integrity

; Sustainability
There is no doubt that competitive transportation rates
are an important part of everyone’s supply chain execu-
tion. But competitive rates must be balanced by the serv-
ice expectations based upon the needs of the ultimate cus-
tomers. Further, competitive rates and service expecta-
tions are the underpinnings of a transportation/capacity
strategy. Such strategies should include specific criteria,
including financial strength, scope, strategic resources,
supply chain expertise, and ability to provide a wide vari-
ety of tools and techniques to impact the entire length and
breadth of an organization’s supply chain.

Jim Butts, C.H. Robinson

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