You’ve heard people say “You can’t get there from here.” In fact, you may have felt that way recently with the disruptions in the apparel industry’s supply chain. When borders closed, and countries went into lockdown, supply chains faltered. Whether you were looking for raw materials or finished goods, logistics became a major concern, especially if you lacked the transparency to locate your shipments.
In many ways, 2020 has been a wake-up call for the apparel industry. According to McKinsey, the industry needs to rethink its business model to create a more agile and sustainable supply chain that can support just-in-time (JIT) operations. It needs to move forward in its efforts to digitally transform its operations.
Carrier management systems (CMS) can help with digital transformations. They are software solutions that provide transparency, enabling a business to pivot its supply chain should a disruption occur. The systems can help companies move to JIT operations.
WHAT IS CARRIER MANAGEMENT SOFTWARE?
A carrier management software solution (CMS) extends a transportation management system (TMS) to the carrier level. CMS solutions provide the following:
- They allow users to benchmark and manage carrier performance.
- They allow users to manage the shipment lifecycle.
- They give users better control over transportation costs.
Most importantly, a CMS should integrate seamlessly into existing operations so businesses can be more responsive when a disruption occurs.
HOW CAN A CMS HELP?
CMS solutions enable businesses to track carrier performance to ensure they are maximizing their delivery routes while minimizing their costs. Using key performance indicators (KPIs), we’ve helped leading companies like Original Favorites make data-driven decisions when supply chain disruptions have occurred. Here are seven ways a CMS solution can help the apparel industry improve customer satisfaction through digital transformation.
1. ON-TIME DELIVERY
Whether the customer is an individual or a large retail store, on-time delivery is a crucial performance indicator. Still, companies can learn more from this base indicator than what percentage of deliveries is on time. The data can be broken down into more detail such as the value of each delivery or the time from warehouse to the customer to provide more granularity. However, it’s measured the data lets companies monitor and control deliveries for improved efficiencies.
2. ON-TIME PICKUP
Monitoring pickup times can help identify potential problems before they impact the bottom line. When a carrier fails to pick up items on-time, businesses need to ask questions. There may be legitimate reasons for an occasional delay, but if it becomes a habit, it’s time to make a change. That doesn’t mean replacing the carrier, although that is an option. By working with the carrier at the first sign of delays, apparel retailers and manufacturers can avoid having to find an alternative means of transport.
3. DAMAGE CLAIMS
Damaged freight is a risk of doing business. At the same time, effectively mitigating that risk can result in an improved bottom line. Monitoring damage claims is another metric that can identify potential problems—the more damage claims, the greater the risk of significant financial loss. With a CMS, a business can analyze the data to determine if it is poor packaging or carrier error that is causing damage.
4. INVOICE ACCURACY
How accurate are your carriers’ invoices? Continual issues with invoice accuracy may impact cash flow, but they will also take away resources to research and resolve discrepancies. When employees have to focus on correcting errors, they are not focusing on the customer. Accessorial charges are one area where billing errors are found.
Accessorial charges are added to an invoice for services rendered, but not included in the original shipping order. Paying attention to these charges can save money. When businesses incur accessorial charges, they should analyze their shipping requirements to minimize the need for the charges. For example, confirming delivery or pickup locations can save on diversion mile charges. The fewer accessorial costs, the lower the freight bill, and the less time employees have to spend resolving charges.
5. DIGITAL INVOICES
Processing paper takes time, which costs money. Even if an invoice is attached to an email, the email may be misdirected or fail to pass a spam filter. It still needs to be printed or digitally stored. Digital invoices minimize paper-based delays.
With digital technology, businesses can exchange billing information electronically. A recent study found that the fashion supplier Peter Grimm had a zero-order error rate in 2019 after adopting electronic data interchange (EDI) technology. That translated into a savings of over $100,000. Not only does EDI reduce costs and improve cashflow, but it can also move apparel companies further along the journey to a digital transformation.
Sending invoices and receiving payments using digital technology should be a part of a CMS solution. In today’s digital world, it is the only way for businesses to remain competitive against such organizations as Amazon or Walmart.
6. PERFECT SHIPMENTS
CMS solutions should keep metrics on the number of error-free shipments. The concept is similar to the zero defects concept in apparel manufacturing. The goal is to have error-free shipping. Using the perfect shipment metric, companies can determine how close they are to reaching that goal. Businesses can use the percentages to identify and correct the processes that create errors.
The OTIF metric measures how often the customer gets what they want when they want it. Many retailers are using the metric to evaluate supplier performance and penalize those that do not meet their standards. It may be a basic measurement, but it indicates how well the supply chain is working.
WHAT ARE YOUR OPTIONS?
Within the apparel industry, a CMS solution can optimize the supply chain by tracking key performance indicators. It can help grow your business, but it takes time to implement. A better alternative is to partner with a third-party logistics service. With over 30 years of experience, Symbia Logistics understands how vital the OTIF metric can be, contact us today.