Aberdeen report focuses on how to beat high oil prices

Staff -- Logistics Management, 8/21/2008

BOSTON—New research from the Aberdeen Group shows collaboration and visibility are part of the key to preventing higher fuel costs from driving transportation costs out of control.

The company surveyed 200 companies and then followed up with interviews of selected respondents, compiling the results in a report, “No Excuses! Why Optimizing Transporation is Within the Reach of Every Company.”

The report indicates the survey “uncovers the key pressures facing today’s transportation managers and the actions and capabilities they are putting in place to deal with the rising cost of fuel and surcharges while trying to provide better visibility to freight and cost status to internal and external partners.”

The report’s results show, among other things, that Best-In-Class companies, or companies that the survey found performed in the top 20 percent of the respondents, have less expedited domestic shipping and show more on-time delivery performance.

“The automation of processes and visibility has enabled transportation managers to better plan for and adjust their shipping decisions on a daily basis, helping them find the most cost-effective options for them and their customers,” says Brad Wyland, a senior research analyst at Aberdeen.

According to the report, the best companies had a 96.6 percent on-time delivery, 2.9 percent expedited shipments, and a 2.9 percent increase in on-time performance in the past two years.

The report also indicated Industry Average companies, or companies with an overall score in the mid 50s, had a 90.8 percent on-time delivery, 9.5 percent expedited shipping, and only a 1 percent increase in the past two years.

Laggard companies, which made up the bottom 30 percent, according to the report, had an 83 percent on-time delivery record, a 27.3 percent rate of expedited shipping, and also showed only 1 percent growth over two years.

The “laggards,” according to the report, are looking into technology right now to try to find a way to improve their numbers. The report showed 55 percent of Laggards plan to invest in a TMS system

“The focus on collaboration and visibility across internal and external departments has clearly provided the Best-in-Class transportation companies with the flexibility and agility necessary to overcome the rising costs in fuel and other shipping costs,” said Wyland.

The report offered the following tips for “laggard” companies to get to Best-In-Class level:

· Demand more from solution providers: Work with their providers to emphasize flexibility and integration to accommodate changing landscapes, both in energy and other critical areas.

· Create tighter partnerships with forwarders and carriers: Closer relationships can reveal opportunities such as new routes and other creative cost-saving ideas. Many companies opt for electronic communications systems that offer real-time information to track changes.

· Continue to stretch the bounds of integration, specifically with customer service and warehousing: Maximum visibility in these areas will identify opportunities to improve efficiency and respond to a changing market.