A lot of people talk about Collaborative Transportation Management, or CTM, as if it were a well-understood and widely practiced discipline. The fact is CTM is still a work in process.
In 1999, the Collaborative Planning, Forecasting and Replenishment, or CPFR, committee of the VICS association recognized that transportation, or the management of transportation, played a significant role in achieving one of the ultimate goals of CPFR…reducing cycle time and inventory in the supply chain. A pilot study was conducted with three supply chain partners, J. B. Hunt, Proctor & Gamble, and Wal-Mart, resulting in the initial whitepaper on the subject published in 2000. Following up on this study, the CPFR committee established a sub-committee to define CTM and provide industry guidelines on the discipline. While the effort is not yet complete, much has been learned on the subject.
CTM is not a clearly defined process like the CPFR nine-step process model. CTM is not simply about putting together continuous moves to improve carrier efficiency. Nor is CTM intended to be the driving force in reducing inventory. CTM is a holistic process that identifies and addresses all forms of inefficiencies throughout the transport planning and execution process. CTM starts with the shipment forecast, includes order generation, load tender, and finally delivery execution and carrier payment. By addressing both shipper and carrier inefficiencies concurrently it becomes collaborative with all parties benefiting.
For carriers, inefficiencies such at empty “deadhead” miles, unproductive waiting time at the shippers or receivers docks, and a lack of critical network mass are addressed. For shippers, inefficiencies such as high transportation costs, long cycle times, high inventory carrying costs, and poor on-time performance are addressed. By reengineering transportation related processes and providing order status visibility, dramatic CTM benefits can be achieved.
So where are all the success stories?
Unfortunately, CTM is not easy for shippers and carriers to achieve on their own and therefore few success stories exist. For shippers and carries to collaborate directly, developing the necessary relationships is difficult. Developing the necessary dense network of shipper freight requires multiple shippers to combine their networks and then execute collaborative transportation solutions. Sharing vital information and trusting CTM partners is proving to be a challenge.
There are enabling technology solutions available that are making it easier but the real breakthroughs are yet to be realized due to the lack of executional capability. There are transportation 3PLs that have demonstrated an ability to bridge this gap, managing the necessary critical mass of freight and carrier capacity, utilizing web-based communication tools and applying optimization technology to ensure optimal performance. For many shippers, using a 3PL will be the easiest, quickest, and possibly the only viable route to achieving CTM benefits.
For those people considering how to achieve the benefits of CTM, make sure you are not fooled by all the industry hype. Demand to see results before deciding which path to take. CTM requires a cultural shift and once headed down that path it’s difficult to turn back.
Reprinted with permission from eyesfortransport.
Author:Joel Sutherland, Senior Vice President, Transplace
