It takes leadership and management skill to become a Best in Class shipper. One question many companies face is where should Transportation fit within the company’s organization structure? Clearly one size does not fit all since manufacturers may have freight budgets ranging from a few hundred thousand dollars to tens of millions of dollars. The Transportation leader in a small enterprise doesn’t need the skill set of an individual who manages a multi-modal, multi-division, multi-million dollar freight budget.
This is not to say that a manufacturer with a small freight spend can be managed by an individual with limited or no freight transportation expertise. In smaller enterprises, we often observe an individual in a small office in the warehouse who has been there for many years, reporting to the controller or operations manager. These people often have a rudimentary understanding of freight and have been doing things the same way for many years.
Even small manufacturers and distributors should ask the question, do their transportation managers have the data (blog 1 in this series, knowledge (blog 2 in this series) and management skill to lead this function effectively. In addition do they have the processes and technology in place to be effective? Supply chain management is rapidly changing. If your freight leaders are lacking in many of the areas outlined in these blogs, it is important for their supervisors to ensure that they are receiving the necessary training. Their lack of expertise may be costing the firm large sums of money (in missed cost saving opportunities). For companies where Transportation is not a core competence, consideration should be given to outsourcing these functions to a logistics services provider that is better equipped to manage transportation.
In larger firms, there are other issues to address. Does the leader of Transportation function have input to the strategies of the business; does the company have a well-conceived supply chain strategy and does this individual have a seat at the decision-making table? Is supply chain management one of the core functions of the company or is Transportation viewed as an end-of-the line execution process? In other words, does the company consider alternate supply chains, alternate modes and transit times, consolidating and deconsolidating freight, where financially attractive and beneficial to its customers? Alternatively, is the transportation department expected to expedite the orders made by Sales or find a way to move partial or full truckload shipments that come off the production line after the truckers have left the building? These are telltale signals that Transportation is not properly valued in the company.
This is where leadership and management skill come into play. Top transportation leaders utilize their knowledge of freight management and their interpersonal skills to make their supply chains as efficient and cost-effective as possible. They have a seat at the leadership table and are able to influence and respond to the needs of the business.
In Best in Class shippers, the transportation leader directs the establishment of the optimal Transportation infrastructure and Carrier Management strategies in collaboration with the Corporate Operations and management teams. This leader identifies opportunities and strategies to consolidate the Transportation spend from multiple locations in order to improve efficiencies and customer service and reduce costs. The individual works with and directs the support staff and colleagues to test and implement strategic transportation and logistics programs. The leader heads the company’s Transportation Management Council and manages relations with selected strategic suppliers. In other words, this is a very capable individual who can help differentiate the company from its peers.
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