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
Lead your organization through the driver shortage and over-the-road regulations.
Potential transportation disruptions are looming as increased over-the-road regulations are set to go into effect in 2017. Experts believe these regulations will further impact the already challenged driver pool as well as reduce driver productivity.
Download Today!
From the January 2017 Issue
Following LM tradition, we start off the New Year with our annual “Rate Outlook” cover story and subsequent Webcast
Moore on Pricing: The other TMS functional options
2017 Rate Outlook: Where are freight transportation rates headed?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Rate Outlook: Where are freight transportation rates headed?
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...

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....