Originally posted on: http://www.inboundlogistics.com/cms/article/leveraging-your-routing-guide/
A routing guide plays an important role in setting the strategy for carrier selection. It is essentially a shipper’s guide to choosing a carrier to move a particular shipment. While there are many forms of routing guides, an increasing number of companies switched from paper to online portals and beyond to enhanced transportation management system technology that enables dynamic routing guides for maximum cost savings and service improvement.
Steve Barber, vice president of operations at Transplace, offers the following tips to get the most out of your routing guide.
1. Balance your routing guide approach. Determine what lanes you want in your routing guide versus how much goes into a backup matrix or spot market. You can realize savings or protect important capacity by tweaking your routing guide to correspond with spot market rates in a particular area.
2. Select your mode first, then your carrier. Before you choose a specific carrier, make a mode decision based on cost, as opposed to more general weight or cube guidelines. Then use your routing guide to select the right truck, intermodal, less-than-truckload, or parcel carrier based on the logistics strategy.
3. Base your guide on your overall logistics strategy. Factor in the importance you place on using asset-based carriers versus third-party logistics providers, customer service standards, and cost savings goals.
4. Use data. Keeping careful track of historical lane, performance, and cost data for your carrier base is critical to ongoing routing guide strategy.
5. Leverage technology. Paper routing guides, and even static routing guides available via a portal, are no longer adequate. Advanced transportation management systems are available to shippers of all sizes managing all supply chain complexities, and can give your organization a cost savings and efficiency boost.
6. Keep it simple. Make sure your strategy and routing guide are as simple as your network will allow. Minor savings may not be worth a multi-tiered, multi-load routing guide. And just because technology makes a certain level of complexity available, doesn’t mean it is the right solution.
7. Know your routing guide depth. How many routing guide carriers do you need for a specific lane? For example, if you have a high-volume route, you may need access to more carriers to ensure that you have all bases covered. If you have a lane with low volume, you might not need as large of a carrier selection.
8. Communicate clearly. Ensure that you carefully communicate carrier awards, expectations, and compliance guidelines with anyone using your routing guide, as well as with your carriers. This includes key information such as ship-to and ship-from locations, drop-trailer, and labeling requirements.
9. Create stakeholder scorecards. Publish stakeholder scorecards weekly to track key performance indicators and data. You’ll want to have scorecards for your ship points—suppliers, distribution centers, and others—as well as your carriers. That way, if something in your routing guide isn’t effective, you can utilize these weekly scorecards to get to the root of the problem and fix it.
10. Stay the course. Set a logistics strategy that works for your organization and stick with it. You can revise your routing guide to make any necessary changes for enhanced efficiency as needed, but a best practice is to completely reconstruct your guide no more than once each year.