Three Principles of Transportation Optimization

Clarifying Industry Misperceptions to Help Companies Maximize Their Transportation Management System Investment

By · June 21, 2011

Companies are increasingly considering their transportation and logistics operations to be a competitive differentiator. As such, demand for advanced transportation management systems is on the rise. According to Gartner, Inc., the transportation management system market should see double-digit growth in 2011 and a five-year compound annual growth rate of 9.4 percent1. With mounting pressure on businesses to contain costs, address capacity constraints, lower their carbon footprints and streamline movements, a flexible, agile and functionally rich transportation management system can help support their service goals. Yet for some companies, pinpointing the optimal solution can be nearly as complex as getting the right products to the right places at the right time and at the lowest cost. One factor adding confusion to the search is the manner in which vendors use — or overuse —the term optimization.

For more than 15 years, transportation solution vendors have been touting the optimization power that their solutions deliver to support more sophisticated planning, execution and settlement processes. Indeed, optimization techniques are proven to drive the vast majority of the business value realized from the use of transportation management solutions. However, not all optimization strategies are created equal and that’s where the confusion lies.

Vendors too often focus on just one function to optimize, which can lead to more harm than good. A simplified optimization approach may prompt a shipper to pick one carrier over another simply based on cost. A comprehensive approach may reveal that the selected carrier doesn’t have enough trucks or docks available to support the load in the first place.


Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
The Cloud Supply Chain Data Network
Understanding the Power of a Shared Online Network to Connect Global Partners and Achieve High Data Quality Levels
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Digital Evolution: Streamlining Logistics and Supply Chain Operations
In this FREE virtual conference we'll define the challenges facing operations and offer solutions designed to create dynamic, automated networks that offer seamless communication, improved collaborative third-party relationships, and the ability to respond to changes at a moment's notice.
Register Today!
EDITORS' PICKS
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....

25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...