Challenges - Freight Forwarding Industry
Strategic Network Planning
Strategic decisions are often based on obsolete information of the past and impact of changes are vague.
Many strategic decisions are based on obsolete information. Volumes change, seasonalities change, customers come and go, costs change--the whole world is changing, and companies often struggle to cope. Many traditional freight forwarding companies, stuck in daily operational battles, struggle to generate a strategic, forward oriented perspective. Without a Strategic Network Plan to rely on, making future oriented decisions is difficult at best, and companies that can’t adapt to future change risk jeopardizing future growth and losing ground to the competition. Office-based tools often fail to provide proper system support for tackling the complexity of the challenge. Freight forwarding businesses need to drive a clear vision of their future, taking known and unknown changes into consideration while simulating a multitude of future scenarios and selecting the most suitable options.
Questions to help build a Strategic Network Plan:
- What are the costs of taking a new customer into my network? What happens if I win (or lose) that customer?
- What happens when freight cost increases by x%? What happens if there are increases in a certain area or within a vehicle type or with one particular subcontractor?
- What are the effects of a special promotion? What will it mean for my network? What is the cost, what is the revenue?
- What are the effects of opening or closing a hub? How will my assets/costs need to change? What will it mean for the capacities of my other hubs? What is the benefit of creating a new X-Dock in between hubs?
- What does a change in lead times mean for my organization? What are the cost implications, which customers are affected, and how will it change my main haul network?
To answer these questions, a Strategic Planning system must be integrated, enabling scenario planning based on validated forecasts. Scenario Decisions need to be verified and allow stakeholders within an organization to see and collaborate on all future iterations, allowing an organization to drive a common vision of future plans.