Fleet operations managers have a lot on their plate, charged with squeezing as much performance and efficiency as they can out of fleet assets. On any given day, they keep track of available loads and load requirements, driver locations, equipment specifications, load rate, expenses, hours of service (HOS), and driver preferences. Toss in an unforeseen disruption, such as traffic, weather, or a port labor stoppage, and execution gets even more complicated.
Suffice it to say that fleet operations are about as critical a piece of supply chain management as can be imagined. When trucks aren’t rolling on schedule consistently, the ripple effect can be pronounced: late orders, lost sales, breached contracts, upset customers, and even line-down events in manufacturing in an extreme instance. And when logistics providers are already challenged in a freight recession that may be finally thawing — as NASA’s mission control flight director Gene Cranz said in “Apollo 13” — “Failure is not an option.”
This is why performance analysis is such an important capability for fleet management. It is a tool used to assess and optimize fleet operations, and that, of course, means data analytics. Technology as varied as transportation management systems (TMS), route optimization, BI software, telematics, fleet management software, fuel management, and data visualization tools is used to keep fleet operations on track.
As in most other supply chain spheres, artificial intelligence (AI) and machine learning (ML) are being leveraged to power real-time fleet analytics and predictive capabilities. The importance of data-driven decision-making in fleet management cannot be overstated.
So, what is involved in performance analysis and performance management for fleet operations? Let’s break it down.
Understanding Fleet Performance Metrics
First, we need to define the metrics fleet managers use to gauge performance, assess the impact, and make adjustments accordingly. Here are some of the primary ones:
- Fuel efficiency: Daily fuel consumption tracking helps fleet managers spot patterns or inefficiencies, such as excessive idling or poor route planning, which lead to higher costs. Improving fuel efficiency not only reduces costs but helps companies meet sustainability goals.
- Vehicle utilization: This tracks how well vehicles are used, including capacity and route efficiency. Ensuring vehicles are neither underused nor overused leads to balanced workloads and better resource management.
- Maintenance costs: Monitoring scheduled and unscheduled maintenance helps managers keep vehicles in service. Proactive maintenance planning reduces breakdowns, lowers repair costs, and extends both vehicle life and the replacement cycle.
- Driver performance: Tracking driver behaviors like speed, braking, and idling affects safety, fuel efficiency, and vehicle wear. Improving driver performance through monitoring enhances safety and reduces operating costs.
- Downtime: Minimizing downtime maximizes fleet productivity. Through proactive maintenance planning, managers can reduce idle periods and improve service reliability.
The Role of Technology in Fleet Performance Analysis
We’ve come a long way from the days of two-way radios and manual fleet/trip/driver logging. Advanced technology has taken much of the guesswork out of performance analysis, not only presenting dashboard views of KPIs but also suggesting ways to optimize fleets based on real-time data.
TMS: A TMS integrates data from various aspects of fleet operations, providing real-time tracking, load management, and cost analysis. It automates route planning and scheduling, reduces manual errors, and provides insights to improve efficiency. As a central data hub, a TMS helps fleet managers streamline operations.
Route optimization: This software tool uses GPS and traffic data to map out the most efficient routes, cutting down on transit time and fuel use. It can also adapt to changes on the fly, such as road closures or heavy traffic, to keep deliveries on track while reducing operating expenses.
Fleet management software: These tools consolidate data on vehicle health, driver performance, and maintenance schedules. Fleet management software reduces downtime and extends vehicle life by providing automated maintenance alerts and tracking vehicle usage. It also supports proactive management, improving efficiency and fleet reliability.
Telematics: Telematics combines GPS tracking, vehicle diagnostics, and driver behavior data, providing a comprehensive view of fleet operations. It helps monitor fuel efficiency, identify unsafe driving habits, and enhance route planning. Telematics helps fleet managers improve safety, cut costs, and meet performance improvement goals.
Analyzing Driver Behavior for Performance Optimization
Driver behavior has a huge impact on fleet operations. Things like speeding, unnecessarily hard braking, and idling all have a negative impact on fleet performance. As mentioned above, Telematics and fleet management software use IoT-based sensors and data feeds to provide a real-time snapshot of driver behavior and how it’s impacting overall fleet performance. Some organizations utilize onboard cameras to track driver behavior.
Using performance metrics from these various tracking tools, fleet managers create driver scorecards to gauge behavior and make recommendations. This is not only a performance improvement exercise but is also used by HR managers to assess advancement, compensation, and discipline or termination where necessary. Companies also implement driver improvement programs based on performance data.
Reducing Costs Through Data-Driven Insights
Fuel monitoring systems track fuel consumption, idle time, and driving habits to identify inefficiencies. Telematics provides data on aspects of driver behavior and vehicle performance that affect fuel usage. Fleet management software keeps track of fuel expenses and generates reports, providing insights for reducing costs.
Fleet maintenance software schedules service appointments based on vehicle mileage and performance data to reduce downtime. Telematics monitors engine diagnostics, alerting managers to issues like overheating or low fluid levels before they become repair issues. And asset management tools log and track vehicle history, so managers can set up cost-effective maintenance schedules.
Route optimization tools generate the fastest possible routes for drivers based on traffic, road conditions, and fuel efficiency. They also analyze past data to predict the most efficient delivery times and routes. GPS systems provide real-time data to reroute vehicles, improving delivery times and lowering fuel usage. And geospatial data tools can analyze geographic data to plan more direct, fuel-efficient routes.
Enhancing Compliance and Safety Standards
Compliance and safety are crucial in fleet operations to protect drivers, reduce liability, and maintain market reputation. Fleet managers must be vigilant in monitoring driver behavior and maintaining a high standard. Performance metrics and data analysis can significantly improve safety, compliance, and efficiency.
Analyzing safety metrics (speed, braking patterns, adherence to traffic rules) with dashboard cameras and telematics provides insights into aspects of driver behavior that might require attention. This allows fleet managers to identify risky driving patterns early. By analyzing these safety metrics, companies can implement targeted training to improve driver habits, increase safety, and reduce accident risk. Continuous safety assessments foster a culture of accountability and safety. Aligning these safety practices with European Union regulations on truck driver safety, such as the European Road Safety Charter, helps companies ensure compliance while promoting safer roads.
Driver fatigue is one of the top causes of accidents, along with distracted driving and substance abuse. While South Africa doesn’t have a law akin to the Electronic Logging Device (ELDs) mandate in the U.S. for tracking driver hours, the National Road Traffic Act (NRTA) requires them to follow driving and rest period guidelines to prevent fatigue and to keep a log of driving hours. In addition, the Road Transport Management System (RTMS) is a voluntary certification program with requirements for driver fatigue management, vehicle maintenance, and overall safety and compliance. Companies certified in RTMS often use telematics to monitor driver behavior, hours on the road, and rest periods.
Fleet management systems integrated with telematics generate compliance reports for agencies and internal audits, helping track adherence to safety and regulatory standards. This includes real-time reporting on driver hours, rest breaks, and miles driven. Automated compliance tools not only simplify regulatory reporting but also lower the risk of non-compliance and fees from violations.
Performance analysis examines patterns of risky driving behavior, so fleet managers can take preemptive action such as scheduling additional training. Advanced telematics and predictive analytics can even identify high-risk situations or routes with high incidences of accidents, so preventive measures can be taken. Reducing accident risk through proactive analysis can lower insurance costs, protect drivers, and uphold a company's reputation for safety.
Implementing Continuous Improvement in Fleet Operations
Implementing continuous improvement in fleet operations helps maximize efficiency and effectiveness. Using technology and data tools, fleet managers can analyze performance consistently, identifying areas for long-term improvements. By adjusting KPIs based on evolving business needs, they can remain agile and responsive to market changes.
Feedback loops help ensure that improvements are actively monitored and become ingrained in daily operations. This type of iterative approach fosters a culture of accountability and encourages ongoing adjustments, leading to better resource management, lower costs, and enhanced service delivery.
Driving Fleet Optimization Through Performance Analysis
Performance analysis is pivotal in optimizing fleet operations by improving efficiency and accountability. Advanced technology and data analytics allow fleet managers to monitor KPIs effectively, making for smarter, data-driven decisions and continuous improvement.
Tramm, the creator of an innovative supply chain TMS, has a suite featuring planning and route optimization, order management, transporter management, real-time visibility, and actionable business insights. Tramm’s Planning & Optimization module uses advanced algorithms to optimize load and route planning, including cross-docking and multi-modal planning in LTL, FTL, multi-day, and multi-fleet. Its advanced analytics and reporting capabilities enable managers to not only track and manage KPIs but also conduct performance analysis at the driver and fleet levels.
Tramm’s real-time tracking capabilities can streamline operations and lower operating costs. Integrating Tramm into fleet operations helps improve safety standards, deliver superior service levels, and drive sustainability initiatives. To find out more, request a demo today.
Related Resources
Route Optimization: The Key to Effective Logistics Planning
Listen to any quarterly earnings call from major logistics services firms like UPS and FedEx, and you’re bound to hear a plethora of statistics that deal with delivery performance: average miles per delivery stop, stops per route, packages per driver hour, cost per package, on-time delivery rate, etc.
These figures matter a great deal because they help determine the company’s profitability (or loss) that quarter, as indicators of operating performance expressed in KPIs. They also have a great deal to do with the concept of route optimization, the art and science of executing deliveries as efficiently as possible.
Within the broader scope of logistics planning – coordinating the movement, storage, and flow of goods within a supply chain – route optimization plays a key role. Transportation managers put a great deal of effort into reducing total miles, eliminating delays, and improving route density metrics (number of stops, packages per stop, per driver, etc.). Performance goals include higher on-time rates, lower operating costs, and higher customer satisfaction, among other key business objectives.
We’ll take a closer look at route optimization, why it matters, how it’s achieved, and the technology behind it.
Aspects of Route Optimization
In logistics and transportation, whether truckloads from a plant to a distribution center or stepvans from a hub to a local run, route optimization involves finding the most efficient travel paths. Factors include the distance between points, traffic patterns, delivery windows, fuel costs, and vehicle capacity.
Determining the best fleet to use in each case is also an important success factor. Transportation managers must not only select between different vehicle types and sizes for each set of deliveries, but also the right number of each type based on fixed and variable costs. Fixed costs include driver salaries and wages, vehicle leasing or depreciation, insurance, licensing and permits, and administrative costs. Variable costs include fuel, driver overtime, maintenance and repairs, tolls, loading and unloading, and third-party fees when using a logistics provider.
In addition to vehicle type and size, other route optimization variables include product suitability and restrictions (i.e., refrigerated), road networks, customer time windows, backhaul opportunities, driver hours of service (HOS), efficient load building, and fuel/rest stop planning.
Balancing fixed and variable costs is important because it helps achieve route optimization by minimizing the total cost per delivery while maintaining efficiency and delivery schedules. By selecting the right number of vehicles, adjusting for stop density, and optimizing distances, businesses can achieve substantial savings and performance gains.
Why Route Optimization is Crucial
Through route optimization businesses can achieve greater cost efficiency, improve delivery performance, and foster sustainability. By identifying the most efficient travel routes, they can minimize fuel consumption, lower labor costs, and reduce vehicle wear and tear. This is particularly important in a competitive environment where even small cost savings can spell the difference between a division’s profit and loss.
Optimized routing helps ensure timely deliveries, improving service reliability and customer satisfaction. From an environmental perspective, it means reduced fuel usage and lower carbon emissions, supporting sustainability initiatives and regulatory compliance. This is also something that can resonate with customers who value greener transportation.
Route optimization also helps companies maximize resource utilization through increased efficiency of vehicle, driver, and asset usage. By balancing fleet capacity, stop density, and delivery schedules, transportation managers can reduce empty miles and truck idling. The result: more streamlined operations, better use of resources, and improved performance.
Logistics Challenges Affecting Route Optimization
It’s hard to believe given technological advances across logistics functions, but manual route planning is still widespread, especially among small to mid-sized businesses. Many companies continue to rely on a combination of spreadsheets, paper maps, or simple routing tools for delivery and route planning. These methods are often in use when delivery volume is manageable and the network is relatively small. But they are inefficient, lack scalability, increase costs and risk customer dissatisfaction.
As supply chains become more complex and expectations increase, the use of route optimization software is growing. Advanced tools like transportation management systems (TMS), GPS tools, and AI are becoming much more common. They all leverage real-time data, machine learning and predictive analytics to optimize routes based on factors such as traffic, weather, fuel costs, and delivery windows.
Larger enterprises – both logistics providers and shippers – rely heavily on advanced route optimization technology to manage vast delivery networks. As e-commerce growth and customer expectations rise, more companies are shifting toward automated solutions to stay competitive and improve operational efficiency.
The Role of Technology
Technology has revolutionized route optimization, enabling businesses to streamline logistics and reduce costs. Route optimization software integrates GPS, telematics, and algorithms, analyzing real-time and historical data to create the most efficient travel paths. These tools consider variables like traffic patterns, weather, delivery time windows, and vehicle capacity.
AI and machine learning enhance these capabilities with predictive analytics, looking at traffic trends, fuel costs, and customer demand to anticipate delays and proactively recommend adjustments. Machine learning models continuously refine routing strategies by analyzing historical data, improving accuracy and adaptability.
By integrating these technologies into logistics planning, companies can reduce total miles driven, minimize delays, and optimize resource use. This helps them achieve their key goals (cost savings, higher on-time delivery rates, improved customer satisfaction).
Key Features of Route Optimization Software
Route optimization software gives logistics managers an advanced tool for improving efficiency and reducing costs. A key feature is vehicle selection. When the optimal vehicle is chosen for each route based on capacity, cost, and suitability, it maximizes utilization and reduces costs. Dynamic route adjustments allow for real-time updates based on changing traffic, weather conditions, or unexpected delays, helping maintain on-time performance.
Multi-stop optimization efficiently sequences stops for deliveries, reducing total miles driven and improving route density. Beyond basic stop sequencing, route optimization software should be designed to handle the complexity, nuances and business rules of each company. This could include factoring things like load building based on relative item weight, customer delivery windows, and site restrictions, to optimize stop sequencing.
System integration ensures seamless communication with WMS, TMS, and fleet management systems (FMS), providing end-to-end visibility across functional areas. And driver behavior analytics enhance efficiency and safety by monitoring factors such as speed, braking patterns, and fuel consumption.
Best Practices for Implementation
Successfully implementing route optimization software requires a strategic approach. Start by defining clear objectives that align with your business goals. This includes identifying key metrics such as cost savings, delivery speed, or carbon emissions reduction in order to measure success effectively.
Invest in scalable technology that can grow with your business. As you expand or deal with demand spikes, the solution should be able to adapt to meet changing demands without disrupting workflows.
Provide thorough training in order to maximize the benefits of routing tools. A well-trained workforce leads to better decision-making and greater efficiency.
Prioritize continuous monitoring and adjustment. Real-time analytics can identify inefficiencies, respond to changing conditions, and fine-tune processes. Regular reviews ensure the system continues to deliver value over time and adapts to evolving challenges.
Partnering with the Right Technology Provider
Key characteristics to look for include proven expertise in logistics software and analytics, as well as an understanding of your industry's specific needs. Scalability is another important requirement, future-proofing the technology so it can grow with your business and adapt to changing needs. The ability to provide seamless integration via API or EDI with WMS, TMS, and FMS sets up real-time data sharing and better collaboration across the supply chain.
The right provider should be able to deliver a realistic implementation timeline that factors in data readiness, integration complexity, user training and any customization. For SMBs with fewer requirements, it can happen in a matter of weeks; in more complex enterprise scenarios it can take 3-6 months, often in a phased rollout.
Continuous updates ensure the technology stays on track with advances in AI, machine learning, and predictive analytics. The provider should also be able to deliver a tailored solution that addresses your unique requirements. This will help optimize performance, increase efficiency and cost savings, and improve delivery speed and accuracy, delighting customers and building loyalty.
A Tech-Driven Route To Greater Transport Efficiency
Route optimization has become a cornerstone of supply chain management, and a reliance on outdated manual processes falls woefully short of achieving its goals. Through advanced technology, businesses can become more efficient, save on costs, and improve customer satisfaction and sustainability.
Tramm, an innovator in supply chain technology, has developed a cloud-based end-to-end TMS platform that combines route planning and load building, transporter management, order management, a logistics control tower, and a mobile app. With this approach, Tramm has solved the problem of fragmented supply chain systems, integrating key functions into a unified, scalable system.
Tramm’s Planning and Optimization Module leverages powerful algorithms to handle complex routing environments, accounting for variables that accurately reflect on-the-ground transport operations. Its dynamic multi-day route planning handles scheduling for primary, secondary, and service-based fleets. Users can easily make real-time adjustments based on changing needs, including “what if” visualization and scenarios. A load builder/stackability app automatically plans loads that are tightly synced with capacity and route optimization.
To find out how Tramm’s unified approach can drive transportation efficiency and cost savings while helping you realize sustainability goals, request a demo today.
Best Practices for Task Management in Mobile Logistics
It’s hard to imagine the world before everyone had a smartphone in their pocket, yet the mobile era is actually just 30 years old (give or take). In particular, mobile technology continues to transform logistics operations by enhancing flexibility, accuracy, and visibility.
Mobile logistics involves using mobile technology and applications to manage, monitor, and optimize logistics through real-time communication, tracking, and data exchange. Elements include mobile task management, GPS tracking, route optimization, and electronic proof of delivery (ePOD), all of which help streamline operations and enhance efficiency.
As supply chains become more complex and customer expectations rise, mobile logistics will only grow in importance. Therefore, organizations need to adopt best practices in mobile task management to maintain efficiency, reduce costs, and keep customers happy.
Benefits of Mobile Task Management in Logistics
Mobile technology is used to assign, monitor, and track tasks in real time. This includes delivery assignments, pickups, inventory checks, and maintenance scheduling. Devices include smartphones, tablets, handheld scanners, and mobile apps. The benefits include:
Real-Time Tracking and Monitoring: greater visibility into vehicle location, shipment status, and route optimization.
Enhanced Last-Mile Delivery: improvements in routing, customer notification, and ePOD.
Improved Communication: smoother coordination between drivers and managers for quick decision-making and problem-solving.
Best Practices for Mobile Task Management in Logistics
As in any other technology application, mobile task management won’t get off the dime if it doesn’t have user-friendly interfaces. The digital aptitude of your workforce and partners will vary widely, and a nice, clean UI helps reduce training time and increase adoption.
Assuming (correctly) that hackers get smarter by the minute, data security needs to be a top priority in mobile logistics. Secure access, regular updates, and mobile device management policies are needed to effectively safeguard user and enterprise data.
Data analytics is another important aspect of mobile task management. In just one of many examples, real-time data on traffic, vehicle availability, weather conditions, and demand can be fed directly into mobile task management tools built into a transportation management system (TMS). Dispatchers can reassign or adjust tasks instantly based on current conditions. In another, route optimization software sends real-time updates to drivers’ mobile devices, ensuring they always follow the most efficient path.
To optimize mobile logistics, a system should seamlessly integrate with ERP, TMS, and WMS systems to ensure consistency across logistics functions. Devices should also have long battery life and be rugged to ensure uptime under difficult conditions such as delivery operations and outdoor use.
Two Use Case Examples
E-Commerce Company
An e-commerce company uses mobile task management to ensure drivers make timely deliveries, notify customers, and confirm deliveries in real time. Via mobile tracking, customers receive live updates on order status, estimated arrival times, and delay notifications, enhancing transparency and customer satisfaction.
Customizable workflows allow for simple to complex setups. Examples of workflows for logistics operations include start/end of day, specific job types, and emergency situations. Some workflows, such as those for compliance-heavy sectors like hazardous materials, can have up to several hundred tasks.
Digitized workflows and documentation eliminate paper-based processes. Mobile apps use GPS and traffic data to give drivers the most efficient routes, reducing travel time, fuel consumption, and vehicle maintenance.
With mobile logistics, the company enjoys streamlined POD via e-signatures or photo confirmation, minimizing disputes. Mobile devices consolidate delivery details, reducing paperwork so drivers can access all necessary information from a single interface. Planners can also view real-time delivery data from the mobile app and make changes on the fly.
As a result, optimized routes and real-time updates help drivers consistently meet delivery windows, while tracking and live updates foster loyalty. Customizable workflows ensure business processes are followed and all records are digitally logged for compliance and legal audit purposes.
There are also fewer delivery disputes and less time spent verifying deliveries. Lastly, ERP integration with automated invoicing enables faster payment.
Regional Distributor
A regional distributor uses mobile logistics to streamline its fleet operations. Equipped with GPS-enabled tablets, drivers get real-time route updates, delivery instructions, and optimized schedules directly on their devices.
Fleet efficiency is improved as managers can monitor and adjust routes on the go, avoiding delays due to traffic or road closures. Drivers can report status updates, delays, or vehicle issues, allowing managers to adjust plans in real time.
Drivers log key information (fuel consumption, mileage, etc.) onto mobile devices, feeding it into the TMS to help power smarter decisions. The results include reduced fuel costs, increased delivery accuracy, and consistent on-time performance, delighting customers.
Embrace the Future With Optimized Mobile Logistics
With its versatility and flexibility, mobile logistics has become part of the way the world works. The always-on connectivity and ability to share data that powers optimization help improve the efficiency of delivery and transportation operations.
For mobile data management to succeed in logistics, companies need to invest in a system with a user-friendly UI, strong data security and analytical capabilities, and the ability to connect seamlessly with adjacent software (ERP, WMS, TMS, etc.).
Tramm, creators of a world-class supply chain TMS suite, has a powerful driver app that features comprehensive workflow management and ePOD capabilities. Its digital documentation processes allow both shippers and transporters to get rid of clunky paper-based processes.
Customized workflows allow companies to utilize whatever functionality is available on their mobile devices: photos, scanning, Bluetooth, NFC, sign-on-glass, etc. The workflow editor, powered by sophisticated code, can create detailed tasks or automatically present workflows based on job types, customer settings, or if-then functionality.
Companies using external transporters lacking visibility into GPS data can send a Tramm mobile app link to the driver for a single trip, enabling reporting and customer updates. They can also manage the entire trip lifecycle using Tramm’s Transact module. For transporters, ERP integration with ePOD through the Tramm app means invoicing is triggered automatically for faster digital payments.
To learn more about how Tramm can revolutionize your mobile task management in logistics, request a demo today.
Managing Large Order Loads to Reduce Split Shipments
In the world of B2B commerce, having an efficient order management process is a baseline capability. Especially when large order loads are involved, the ability to achieve a high percentage of orders shipped complete drives significant transportation savings, as split shipments eat away at margins.
There are several factors that drive an increased reliance on split shipments for large order loads, sometimes acting in combination to exacerbate the issue. These include how inventory is distributed in a network, the pressure on stock levels from large orders, and the operational strain it can cause. That’s why order management precision and efficiency is at such a high premium, especially when disruptions like a major port strike throw a wrench in the works.
This article examines split shipments and the issues they cause within the supply chain and distribution and explores some best practices to avoid them. The aim is to help reduce operating expenses, improve product availability, and increase customer satisfaction.
Definition and Causes of Split Shipments
A split shipment happens when an order is divided into multiple shipments due to low stock levels, logistical constraints, or both. Often, businesses feel forced to ship what’s available immediately and send the rest later, hoping that customers can get by on the partial order in the meantime.
Some common causes of split shipments on large B2B orders include the following:
- Multiple suppliers: Variations in supplier lead times or stock availability can cause parts of the order to arrive at different times.
- Order complexity: Large orders often involve diverse products with different handling, storage, or shipping requirements. For instance, temperature-sensitive or hazardous goods requiring specialized transportation often lead to separate shipments.
- Order prioritization: High-priority, in-demand products are time-sensitive, which can lead to shipping what’s on hand separately while waiting for replenishment to send the rest.
- Warehouse fulfillment: Large orders can tax the resources of warehouse operations. SKUs stored in different locations or those requiring a different picking process can cause delays, leading to split shipments.
- Backorders and lead time variation: Some items have significantly different supplier lead times, forcing businesses to ship only a portion of their available inventory and put the balance on backorder.
- Inefficient systems: Without an advanced order management system (OMS), businesses lack real-time inventory visibility across multiple locations. This leads to fragmented fulfillment decisions and more split shipments.
The High Cost of Split Shipments
While some split shipments are inevitable or unavoidable due to external factors, costs go up along with higher frequency. Transportation is clearly the highest direct cost, as it’s generally the second highest expense as a percentage after labor, and more trips are required. There’s also the added complexity of scheduling additional pickups with transporters.
Speaking of labor, split shipments also hit this cost center, as they lead to more man-hours spent preparing orders through picking and packing.
Indirect costs include damage to customer relationships and reputation and the potential loss of future business. B2B customers rely on complete orders to meet production schedules or product demand. As a result, many retailers have implemented on-time in-full (OTIF) requirements. The idea is to enforce greater supply chain optimization by tight collaboration among retailers, brands, transporters, and logistics service providers.
Failure to meet OTIF requirements results in fines and penalties. A McKinsey study found that many retailers in North America are tightening OTIF requirements by narrowing delivery windows and increasing fines while revising the definition of in-full delivery.
A higher incidence of split shipments can reflect deeper issues of poor inventory management, such as stock imbalances or inefficient replenishment processes. Finally, they contribute to higher carbon emissions from the additional truck trips required.
Other Split Shipment Headaches in B2B
Split shipments introduce complexities that impact multiple areas of operations, including order tracking, invoicing, and customer communication. Each contributes to inefficiencies, often leading to higher costs, increased labor, and a decline in service quality.
Tracking Complexity
When shipments are split, tracking the order status becomes more complicated because different segments move independently through the supply chain. Logistics teams have to track each portion of the order separately, from inbound inventory to fulfillment and delivery. This involves monitoring multiple tracking numbers, the status of transporters, and estimated delivery times.
Managing Multiple Invoices
Split shipments often lead to multiple invoices, complicating accounts payable for both the shipper and customer, including reconciliation of multiple invoices against the original order. Each invoice might include different shipping costs, taxes, and fees, adding to administrative overhead. In some cases, customers might withhold payment until the entire order is delivered, adding more complexity and delaying closing the transaction.
Customer Communications
In B2B transactions, logistics and delivery impact a customer’s production schedules, inventory levels, and downstream operations. Shippers need to manage expectations around timing, coordination, and delivery schedules. Customers often rely on complete shipments to avoid production downtime, which causes frustration and the pain of adjusting internal processes.
Split shipments also require customers to coordinate with receiving teams across multiple deliveries. Additional labor and resources are needed to accept, inspect, and verify each portion of the order upon arrival.
Leveraging Technology to Optimize B2B Order Management
Advances in technology for supply chain and logistics have made it easier for businesses to optimize their inventory and order management processes in order to reduce the incidence of split shipments. Here are some examples.
WMS
A warehouse management system (WMS) provides real-time updates on inventory levels, enabling better decision-making and reducing stock-outs that lead to split shipments. Most systems can also automate inventory replenishment to ensure that items in high demand remain in stock, reducing the need for split shipments.
OMS
An order management system (OMS) integrates order data from various sources (e-commerce platform, ERP, CRM, WMS, etc.), providing visibility into inventory availability. This helps drive a higher percentage of “order complete” confirmations before shipment. An OMS also has consolidation logic for prioritizing full order fulfillment vs. partial shipments.
Tramm, a developer of a leading unified supply chain management platform, combines a powerful OMS within its transportation management system (TMS) suite. This integrated approach provides end-to-end visibility and control over order fulfillment and shipping processes. Tramm’s Order Management Module ensures that orders are fully consolidated before being released for shipment, while the TMS manages transportation in the most efficient, cost-effective manner.
Using real-time data synchronization, Tramm’s integrated approach ensures that any changes in order status, inventory levels, or shipping schedules are immediately reflected across both systems. This allows the OMS to quickly adjust fulfillment strategies if stock availability or transporter issues arise, reducing the need to rely on split shipments.
Predictive Analytics and Demand Forecasting
Predictive analytics tools tap the power of AI to enable proactive inventory management. By more accurately forecasting demand and optimizing inventory levels, both stockouts and split shipments are reduced. This technology enables users to foresee potential supply chain disruptions and adjust fulfillment strategies accordingly.
Automated Fulfillment and Transporter Routing
Fulfillment automation reduces errors in picking/packing, allowing a higher percentage of full orders to be processed and minimizing the need for split shipments.
Smart routing automatically directs orders to the most appropriate warehouse or fulfillment center, optimizing shipments and reducing transportation costs. Tramm’s Planning & Optimization Module uses advanced algorithms and visualization tools to drive better, faster load and routing decisions. The result is operational cost savings, including reduced split shipments and highly responsive planning capabilities.
Supplier Collaboration and Data Sharing
Collaborative planning includes sharing inventory and demand data with suppliers, improving stock replenishment, and reducing the likelihood of split shipments. By employing Vendor-Managed Inventory (VMI), suppliers manage stock levels, helping ensure that products are consistently available. This minimizes the need for split shipments due to out-of-stocks.
Best Practices to Minimize Split Shipments in B2B Order Management
Companies can take several steps to improve their order management processes, increase efficiency, and increase the percentage of “shipped complete” orders.
Centralized Inventory Management
Centralized inventory involves keeping all stock in one primary location, such as a warehouse, fulfillment center, or other storage facility. This central hub typically manages not only inventory but also key logistics functions like order processing and fulfillment.
In a centralized inventory system, the majority of operations, including order management and distribution, are handled from this single location, even when there are multiple sales channels or retail outlets. This strategy reduces the need for split shipments due to inventory imbalances.
Order Consolidation Policies
Order consolidation involves combining multiple orders into a single shipment. This can be done by centralizing items from multiple orders into a single location or by combining multiple orders from different sales channels into a single system.
Order consolidation can benefit businesses in several ways. This includes lower transportation costs based on economies of scale, better management of stock levels due to fewer shipments, overall simplified logistics, and a better customer experience through more complete orders.
Smart Reordering Strategies
Smart reordering is a rules-based, automated process utilizing data analytics and AI to manage inventory levels and optimize replenishment. Unlike traditional reordering, which relies on manual tracking or fixed schedules, smart reordering uses real-time data (sales trends, demand forecasting, lead times, supplier performance, etc.) to predict when SKUs will need to be replenished.
This approach helps ensure that critical and/or high-demand products are always in stock, preventing backorders and reducing the need for split shipments.
Transparent Customer Communication
This seems like an obvious point, but too many organizations fail to keep customers updated on order status. This is especially important when unexpected drops in inventory levels or logistics snafus require a split shipment.
Always give customers the option of waiting for replenishment to send a complete order or receiving a partial shipment first. In some cases, the added expense of expedited transportation comes into play to make things right and keep to their schedule.
Continuous Monitoring and Adjustment
Regularly analyzing order data helps identify patterns that lead to increases in split shipments. By tracking trends in demand, stock levels, and fulfillment performance, you can proactively adjust inventory management, including redistributing stock across locations or improving order consolidation processes.
Leaning On Technology to Optimize Large Order Loads
Minimizing split shipments is important to maintain supply chain efficiency and reduce transportation costs. Software such as OMS, WMS, and predictive analytics tools can improve inventory management and streamline fulfillment processes. Best practices such as smart reordering, order consolidation, and continuous monitoring help reduce the incidence of split shipments.
Tramm integrates transporter management, route optimization, order management, customizable dashboards, and a control tower to optimize routing and order allocation. When shipments do need to be split, Tramm automates the process based on operational and resource requirements.
Tramm’s FleetVision Module gives users access to precise real-time data and insights. With a better understanding of fleet operations on a granular level, they can manage each load more effectively and implement performance improvement measures. The result is greater efficiency, reduced costs, and improved customer satisfaction.
To learn more about how Tramm can drive measurable improvement in your supply chain and logistics operations, request a demo today.
Sustainable Logistics: How Optimized Routing Can Reduce Your Carbon Footprint
The world of logistics and transportation cannot afford to slow down, and the trend toward sustainable logistics is working hard to catch up. Demand for shipping and delivery services is only increasing in a fast-moving, interconnected global economy. But with this growth comes greater pollution levels from vehicles and logistics networks.
For this reason, it shouldn’t be surprising that 75% of logistics companies have a focus on sustainability, according to a May 2024 survey by the Germany-based Logistics Hall of Fame. A majority of respondents rated the risk of financial loss due to climate change as “medium to high.”
This is why major efforts are underway to reduce trucking-generated pollution by implementing a sustainable logistics program. These include efforts to optimize routing, grow alternative fuel fleets, increase the use of automation, enforce stricter emissions standards, and ramp up intermodal transportation.
Optimized routing, in particular, has emerged as a powerful tool to not only reduce transportation costs but also significantly minimize carbon emissions, making logistics operations more sustainable.
The Environmental Impact of Logistics
Transportation contributes more than a third of all CO2 emissions globally, with nearly two-thirds of that coming from trucking, according to the International Energy Agency (IEA). In addition, transportation relies on petroleum products for nearly 91% of its energy, down just 3.5 percentage points from the early 1970s.
Excessive fuel usage in everything from long-haul trucking to last-mile delivery, traffic congestion, and poorly planned routes contribute to higher CO2 emissions. At the same time, regulatory pressure and consumer demand for more sustainable business practices are forcing companies to adapt.
The Basics of Route Optimization
Route optimization tools use advanced algorithms and predictive analytics, parsing historical and real-time data to identify the most efficient delivery routes. Factors taken into account include traffic conditions, weather, vehicle capacity, delivery windows, and road restrictions.
Many routing tools within a transportation management system (TMS) also include load optimization capabilities, enabling companies to maximize their available freight capacity and improve key metrics like revenue per mile, cost per delivery, and fleet utilization.
State-of-the-art route optimization tools employ dynamic multi-day route planning and scheduling across trucking modes, everything from LTL, TL, middle mile, last mile, private fleet and dedicated transportation services.
Reducing Fuel Consumption and Carbon Emissions
As route optimization enables companies to reduce the number of miles driven, an immediate, tangible benefit is a significant saving on fuel consumption.
These tools also allow drivers to avoid areas of traffic congestion, helping to improve on-time delivery performance. This not only reduces truck dwell time and, thus, tailpipe emissions, but also increases customer satisfaction.
By optimizing load capacity, companies can put fewer trucks on the road, further reducing fuel usage and emissions — further driving sustainable logistics.
The Role of Real-Time Data in Sustainable Routing
Access to real-time data on traffic, weather, and road conditions allows for dynamic rerouting to avoid delays and minimize emissions. Traffic data can come from GPS systems and platforms like Google Maps or Waze for information on congestion, accidents, and road closures.
Weather data from apps like The Weather Channel or OpenWeatherMap provide updates on conditions (thunderstorms, high wind, fog, snow) that might affect a trip, rerouting if necessary. Telematics and sensors take in data on vehicle location, speed, fuel usage, and status from onboard systems or fleet management software.
Updates from order management systems (OMS) on delivery windows and customer availability also become part of the routing equation, as does data on weight or height restrictions and road closures from transportation departments. Routing software also tracks fuel efficiency and vehicle performance, reducing environmental impact.
Other Benefits of Route Optimization
In addition to reduced fuel consumption and lower operating costs, route optimization enables faster, more reliable deliveries, improving customer relationships and fostering loyalty.
Optimized routing also helps companies meet their environmental goals through sustainable logistics. This includes compliance with government regulations and qualification for certifications such as LEED, ISO14001, and SmartWay.
Route Smarter, Stay Greener
Route optimization improves logistics efficiency and plays a crucial role in reducing carbon emissions. An investment in this technology helps drive both sustainability and competitiveness in a business climate that increasingly values environmental responsibility. By embracing sustainable logistics practices through the use of these tools, companies can reach their goals while driving down costs through efficiency gains.
Tramm, an innovator in supply chain technology, has developed an end-to-end TMS platform that combines route planning, load building, transporter management, a supply chain control tower, and a powerful mobile app. With this end-to-end approach, Tramm has solved the problem of fragmented supply chain systems by integrating key functions into a unified, scalable platform.
Tramm’s Planning and Optimization Module handles complex routing environments, accounting for variables such as rules and constraints that accurately reflect on-the-ground transport operations. It allows users to easily adapt their plans based on changing needs, including “what if” visualization and scenarios that enable real-time adjustments. A load builder/stackability app lets them automatically plan loads that are tightly synced with capacity and route optimization.
To find out how Tramm’s unified approach can drive transportation efficiency and cost savings while helping you realize sustainability goals, request a demo today.
