Two-part series: Developing Symbiotic Carrier-Shipper Relationships & tools of the Data Scientist
Authored by SMC³ on December 22, 2023
What does it take to forge a productive, mutually beneficial relationship between shippers and carriers in today’s competitive LTL environment? As attendees at SMC3’s recent LTL webinar on the topic learned, it boils down to four things: partners sharing data, analytics, crucial insight, and getting to the “we.”
In the third LTL online learning session, Joe Tillman, manager of education programs at SMC3, moderated the session with Karl Manrodt, Ph.D., CTL, professor of logistics at Georgia College. The webinar panelists were Ron Guzzi, senior manager of carrier relations and sourcing at The Home Depot, and Jim Badovinac, vice president of LTL commercial development at Green Mountain.
Guzzi began at The Home Depot 27 years ago, taking on various transportation roles such as the truck rental program and flatbed delivery of appliances. Badovinac got his start in transportation working in sales for Old Dominion and then spent 20 years in revenue management at FedEx. Shortly after retirement in 2018, he reentered the industry and became an LTL consultant at Green Mountain.
“Once you get into transportation, it’s really hard to find a way out,” said Badovinac. “And you really don’t want to find a way out because it’s just so challenging and rewarding.”
Importance of Relationships
The moderators and panelists agreed that relationships and trust are critical factors on both the carrier and shipper side of the business. They acknowledged that there is not always a high level of trust between shippers and carriers, but they believe the tides are changing. “It’s relationships that drive business, drive value, and drive the right outcomes for both parties,” said Badovinac.
Guzzi noted that shippers cannot be successful without carriers being successful. “We need carriers to be profitable so we need to arm them with all the information and data they need to understand expectations. At The Home Depot, we do everything we can to put carriers in a good position and that comes through collaboration, partnership, and the relationships we have,” said Guzzi.
Market conditions and fluctuations can put a strain on shipper-carrier relationships. That is one of the reasons Guzzi said The Home Depot has gone down the path of shipper of choice. He sees this type of shipper-carrier relationship as a business partnership that can work together to overcome shifting market forces.
“The pendulum can swing way too far to the carrier side in an up market and way too far to the shipper side in a down market,” said Badovinac. “Today, I work with shippers and carriers to keep that pendulum in a navigable range.”
Data Leads to Trust
It might seem counterintuitive, but Badovinac recommends that shippers provide as much data as possible to establish trust in relationships with carriers. The data download needs to happen on the front end of onboarding a carrier so they can price the business accurately. Data about weight and dimensions go a long way toward alleviating carrier concern about damaging a shipper’s freight and ensuring the information on a bill of lading is accurate. Using electronic bills of lading can streamline the process.
“There are myriad of different ways in which shippers can provide data to carriers to help them make better pricing decisions,” said Badovinac. “Once the relationship is up and running and business is flowing, you’ll want to measure on-time pickups and deliveries as well as claims and exceptions.”
On the flip side, carriers need to ask many questions to be able to price shipments accurately. They need to ask for historical volume data and forecasted volume data to get a clear picture of how to best service the account.
Guzzi noted that statements of work do more than just share legal language. “There’s a lot of information about the business expectations such as what is considered on time or when pick up will take place. Are the windows measured to the minute, the hour or the day?” he said.
How to Become a Shipper of Choice
Sharing accurate, extensive data plays a big role in becoming a shipper of choice. But the panelists said other factors can also elevate a shipper to this coveted status. For example, avoiding detention time so drivers can spend more time at home and having shipments ready for pick up on time.
Offering amenities for drivers like vending machines with beverages, free WiFi, and clean restrooms can also make an impression. On the carrier side, making timely payments so they can pay their drivers on time goes a long way.
“If the drivers are not happy going to a location, then the carrier won’t necessarily go after that business,” said Guzzi. “Or they’ll price it with a premium to give drivers a little bit more wage or detention time.”
From Badovinac’s perspective, shippers should collaborate with carriers like strategic supply chain partners. Think of these relationships as more strategic than transactional. Just as shippers have scorecards on carriers, carriers need to have scorecards to help shippers improve and become more desirable to the carrier world, he explained.
Tap Into the C-Suite
Badovinac also recommended that carrier sales representatives ask for an executive sponsor in the C-suite at large shippers. Hold meetings with executives at a shipper or carrier every six to 12 months so both sides know exactly where they stand. Quarterly business reviews with mid-level operations management can also be beneficial in cementing the carrier-shipper relationship.
Move Beyond Transactional Relationships
Good shippers know there is much more to a good relationship than bidding and awarding the business to the cheapest carrier. There are many business requirements that need to be considered when choosing a carrier, including as past performance, consistent capacity, surge ability and emergency loads, and responsiveness.
Future Outlook for Shipper-Carrier Relationships
The panelists predicted turbulent times ahead for shippers and carriers with dimensionalized pricing, autonomous vehicles, and truckload carriers purchasing less-than-truckload (LTL) carriers on the horizon. The keys to navigating the changing landscape and mitigating surprises are communication and education. Giving a nod to SMC3’s three-day JumpStart supply chain event every January, Badovinac said “JumpStart is a great place to network, be educated, and really feel like you’re on top of things.”
Guzzi noted that it will be critical for both sides of the industry to do its best to weather any storms that arise. “Rates will change. The overall conditions of the industry and market will change. But our top carriers will still be the ones moving 75 percent of our volume [at The Home Depot],” said Guzzi. “If we look for cheaper, less sustainable carrier options during very soft conditions, our core carriers probably won’t be available when we need them back. Don’t go down a path of chasing those temptations because it’s probably not sustainable.”
In the world of data analytics, there are three types of methods: descriptive, predictive, and prescriptive. Yet, we haven’t fully understood the true power of the descriptive statistics and the importance of getting that right before moving to more advanced models and tools. In its final less-than-truckload (LTL) business analytics webinar of 2023, SMC3 set out to dive into the power of descriptive analytics to drive better business decisions.
Next- in the fourth LTL online learning session, Joe Tillman, manager of education programs at SMC3, moderated the session with Karl Manrodt, Ph.D., CTL, professor of logistics at Georgia College. The webinar panelists were Erica Brigance, vice president of data science at ArcBest Technologies, and Meghan Ziegler, data scientist at SMC3.
Brigance has worked for ArcBest, a custom-built technology provider for the transportation industry, for nearly two decades and was named a 2022 Women in Supply Chain award winner by Supply & Demand Chain Executive magazine. After earning her Bachelor of Science degree in chemical engineering, Ziegler made a career switch to data science because she had a passion for math and Python programming.
“The big shift is that data used to be something that you know and you managed it,” said Brigance. “Now, you need to use the data, insights, and metrics to drive results. That’s becoming table stakes for any role in our organization.”
Ziegler concurred. “Now we can use data to drive improvements across an entire organization,” she said.
Corralling Data and Informing Stakeholders
Brigance detailed how ArcBest Technologies created a formal data literacy program this year to ensure its department understands the responsibilities of their roles and is equipped with the right tools to understand how they got to the information shared. She has also been working with the training team to get data science integrated into the onboarding process.
“Everyone needs to understand how to use metrics and how to make decisions based off metrics,” Brigance said. “This has been a large initiative for us this year and I see that continuing for multiple years.”
Brigance expects this approach will impact its customer base as well. “We’ve got a ton of APIs and a lot of our customers are using that to pull data to make better decisions. Same with EDIs.”
All of the supply chain challenges that occurred during the pandemic have ushered in a need to harness more information and develop risk mitigation plans. If something happens, shippers want to be proactive and that comes from harnessing data to make the situation better.
Visibility = The Whole Picture
Having visibility through data tells a story, said Ziegler. She pointed to the large volume of data moving through SMC3 products and their continued focus on developing the tools and resources the industry needs to get visibility and see the full picture.
“Our customers are seeing the value of the full picture of their data so they can make decisions and changes,” said Ziegler.
Brigance stressed that everyone needs the right information at the right time to make the right decision—whether it’s an employee, a customer, or a carrier. “Nobody likes to feel that they’re making a blind guess. We want to feel comfortable when we make the decision that we’ve been given all the information,” she said.
However, lack of complete visibility is a persistent issue for the supply chain industry. Moving freight from point A to point B can sound easy on the surface, but it can be very a complex process to stitch all the pieces together.
Framing the Problem, Asking Critical Questions
In a world awash with data, Manrodt suggested reading the book, Keeping Up with the Quants—Your Guide to Understanding and Using Analytics by Tom Davenport and Jinho Kim. “The first thing they talk about is framing the problem and determining what problem you are trying to solve so you can have a great data set,” Manrodt said.
Brigance agreed. “It might be better to think small and build something that can be added onto rather than striving for perfection from the start,” she said. She noted that she looks for people who are curious and can think critically when she interviews for her team—those who can ask critical questions and challenge assumptions.
Keeping Up with an Ever-Changing Landscape
The world of machine learning, data science, and programming is constantly changing. To keep up, Ziegler said she takes time each day to consume bite-sized information from authoritative sources on LinkedIn and reads blogs written by other data scientists.
In turn, Brigance said she “protects” time in her days for reading about new advances or trends and mandates that her team spend five percent of their time annually on training, education, and research vetting new technologies.
“A year and a half ago, we weren’t even thinking about generative AI and now it’s dominating all of the requests that are coming in,” said Brigance. “If we didn’t take the time to look at that, we would get caught up in the whirlwind and be making some bad decisions.”
For more information on joining SMC³’s next LTL session, click here – https://bit.ly/ltlonlinelearning