The complicated world of modern logistics came into full view in 2020 when the COVID pandemic disrupted various supply lines worldwide. What was assumed to be a stable system became apparent in its reliance on multiple partners communicating with each other, as well as working with each other as a coordinated, international team. That didn’t always work so well because many times awareness was missing.
Old Thinking in Tools Being Used
Part of the vulnerability of traditional freight procurement tracking tools and management aids comes from the fact that they rely on a static model. The whole management approach relies on a waterfall concept that continues to flow from one link in the chain to the other until the package gets from point A to point B. However, when there is a disruption unaccounted for in the system, it falls apart being unable to deal with the unknown factor. The rapid fluctuation of today’s markets has to be adjusted daily, which is where old software models are unable to adapt.
Not All Logistics Players Want to Play Nice
Much of the breakdown has been the over-reliance on contract transport, which in turn makes logistics centers co-dependent on third party movers versus using their own fleet. This allows movers to play the market for the highest price, and it forces logistics centers and shippers to pay higher prices. Traditional freight procurement software can’t keep up with the market changes as they occur in pricing, having been designed for pricing elements that were only updated maybe monthly.
Change Tools to Match Market Realities
Modern freight procurement software has to be able to connect to open markets and feed off the latest pricing changes to find the best shipping value available in a 24-hour window. The result can be thousands of dollars of difference by the hour at times, with adept and flexible software practically paying for itself within a few weeks in terms of cost avoidance and savings.
The world is moving far too fast now for old models and paradigms. Shipping and logistics, even regional, are affected by fast-moving markets and players working off the latest price points for advantages. No one can rely on relationships to be stable, especially when logistical supply and demand can swing so dramatically because of chain disruptions. Modern logistics managers have to be able to keep up with planning effectively, or their companies will become the next target to be fleeced by over-pricing on transport and support costs.