What is Transport management?
Logistics management is a part of supply chain management, and transportation is a part of logistics, then transportation management naturally belongs to the scope of supply chain management.
The location of transportation management in the overall supply chain activity is between order processing and warehouse or distribution center activities. Both manufacturing and retail companies need to receive raw materials or goods, process or store them, and then send them to customers, so transportation management is divided into three stages:
1. stage is the link into the factory warehouse of the enterprise, usually called Inbound Logistics.
The second stage is the process of material circulation in the warehouse factory, for example, raw materials need to go through several processing processes to become finished products, so they need to move between different machines and equipment, this stage is called on-site logistics.
The last section is the activity of finished goods leaving the warehouse or distribution center, so it is Outbound Logistics.
Transportation management is not simply the movement of goods, but a system of complex activities, including the prior planning, execution, and post-delivery of goods to be transporte
2. Flow chart of transportation management
The first step is to make a shipment plan, what goods need to be delivered, the quantity, and decide the mode and route of transportation, which need to be planned in advance.
The second step is to carry out specific transport management operations, such as booking transport vehicles, making invoice boxes, arranging warehouse shipments and so on.
The third step is invoicing and reporting after shipment, including tracking the goods, invoicing the customer, checking the shipping invoice provided by 3PL, and arranging payment. Next, let’s take the process of outbound logistics as an example to see how the three steps of transportation management are specifically developed.
- Shipment plan
In supply chain management, all activities need to be planned in advance, which can avoid back-and-forth situations during execution.
Once a plan is made, everyone follows the same plan, just like in a symphony orchestra, where the players focus on the stick in the conductor’s hand in order to produce harmonious music.
The planner is the conductor of the orchestra, who decides when, how and in what quantity to transport. If you get the plan wrong, you need to readjust it later. For example, the originally booked vehicle is not needed, cancel the reservation, if the vehicle is already halfway on the road, let the driver run for nothing, there will be cancellation fees.
Or another situation, less-than-carload transportation can not catch up with the arrival date, to change to the special car transportation, you have to pay the money of the chartered car. Each of these contingencies creates additional operating expenses that could have been avoided.
Why is supply chain management chaotic? More than half of the problem is the source of the plan, the plan to make it right, you can ease the pressure on the implementation level, reduce transportation costs, improve the overall efficiency.
Having said the importance of planning, let’s look at the first step of transportation management, the source of shipment planning is customer orders, or customer demand. - Delivery execution
1) Make a plan and choose the mode of transportation
When the warehouse confirms that there is enough inventory, the next step is to choose the mode of transportation. If it is a domestic customer, it will generally choose truck transportation, and in special emergencies, it will use a more time-efficient mode, such as air or next-day delivery.
If the customer is abroad, they usually use container shipping, rail, or faster air freight. The transport mode is selected based on whether the goods can arrive at the destination before the date requested by the customer.
2) Is there a shipping quote?
Suppose the manufacturer Ningbo needs to use land transportation to transport the goods from Ningbo to Guangzhou. The first thing to check is whether there is a valid offer on this line.
3) No offer, start the inquiry
Let’s assume for a moment that there is no Quotation, which means that there is an inquiry to be made before shipping begins, a process known in procurement terminology as a Request for Quotation (RFQ).
If it is international transportation, also need to pay attention to the currency unit of the quotation, the European line is likely to be quoted in euros, Southeast Asia and the Americas line usually use US dollars, we need to convert the quotation into the same exchange rate.
It’s worth thinking about, should we make decisions based on price, or should we prioritize timeliness and transportation services? In fact, there is no standard answer, because in different scenarios, decision-makers will have different priorities.
If the enterprise is transporting daily necessities such as shampoo, the main factor considered in the supply chain is cost control, and the transportation task is completed with the least money. The price of ordinary daily necessities is lower, and the shelf life is longer, and there is no high requirement for the aging, so it is cost priority.
On the contrary, the price of consumer electronics is higher, so it is not sensitive to transportation costs, as long as 3PL can provide more reliable timeliness and service quality, it is easier to get the favor of customers. Under normal circumstances, the choice of offer is made after considering cost, timeliness and 3PL’s past performance.
4) Price confirmed, ready to ship
When the transportation price is determined, the manufacturer can be ready to ship, and needs to send the actual quantity information and the required arrival date to 3PL, asking the other party to provide the corresponding transportation service. 3PL needs to complete confirmation as soon as possible after the receipt is booked, and then arrange for the vehicle to arrive at the designated place for loading at the time requested by the customer.
After the manufacturer completes the warehouse loading, it can get a detailed list of the actual shipment, and then make invoices and packing lists, and send to the consignee customer. The shipping document has clear information about the goods and the consignee, and is an important document to settle the freight with 3PL. - Invoices and reports
3PL shall settle the cost after the completion of the transportation task and issue the transportation invoice to the manufacturer. Before this, the two sides shall first check the account to avoid the inconsistency of the amount found after the invoice is issued.
1) Financial reconciliation
How to reconcile accounts? You can learn from the classic “three points of consistency” principle of financial payments. In the direct material purchase management process, the “three points” are supplier invoices, purchase orders and receipt documents. Conformity means that quantity, unit price, order description and other invoice information must be able to correspond.
The three documents must match exactly in order to guard against errors and potential malfeasance. Logistics services are indirect procurement, the same principle can be used.
First, whether it is for materials or services, the essence of the invoice is the same, it is the original document of the cost, expense or revenue incurred.
The second point is that the receipt document is the actual transported item, which is equivalent to the shipping document.
Third, the quotation of logistics services can be understood as a purchase order, which lists in detail the operation activities of each item and the amount of charges.
2) Summarize transportation expense reports
Supply chain managers need to review freight expenses on a regular basis, so they need to compile expense reports to extract valuable information from the data, which can be used to make budgets or forecast future shipping price trends. This activity needs to be divided into two steps, first collecting data and then analyzing it.
3) How to use shipping data?
The shipping bill is a very “raw” piece of data, it is like a piece of unpolished jade, the value is not reflected before it needs to be cleaned and analyzed to show the power of the data.
Excel is the most basic operation for data analysis. Users can configure various fields according to their needs and extract all kinds of useful data for future data analysis and model building.