Routing guides may have been the best technology available 10 years ago, but there are better ways to handle your transportation planning.
Technology evolves rapidly, often improving upon old systems while rendering others obsolete. This is the case when it comes to routing guides. While it may seem like you absolutely need one to ship your goods, the truth is they’re becoming outdated and useless in the face of elastic supply chains.
For many businesses with a routing guide at the center of their transportation strategy, keeping that routing guide optimized for today’s shipping environment is a full-time task. The problem is, your shipping strategy needs the flexibility to navigate supply chain volatility. So why aren’t routing guides able to keep up and what can replace them?
What is a Routing Guide?
Routing guides are documents that lay out specific guidelines for shipping out products to customers. They take into account things like
- Volume Discounts – If you’re shipping high volumes on certain lanes, you can get discounted rates through the contracts you have with those carriers.
- Customer Requirements – Specific carriers preferred by customers because of service requirements.
- Modes of Transportation – If you have a business-to-consumer operation running alongside direct-to-distributor operations, a routing guide provides guidance on everything from preferred carriers for specific modes of transportation to recommended modes for specific lanes.
The Issue with Routing Guides
One of the main issues with routing guides is that they aren’t flexible or efficient enough to adapt to volatile supply chains. Think about this: the supply chain is severely fragmented. Current volatility and shipping prices are likely to last all the way to the holidays. If your volume increases, what are you going to do to stay ahead of the curve? What are you going to do between now and 2025, when the parcel volume is projected to increase by 100%?
You need a dynamic and elastic shipping strategy that can keep up with rapid changes in the supply chain. Routing guides may have provided that 20 years ago, but they are simply not sustainable given today’s demand for efficient, seamless shipping practices.
Not to mention, when you ship a product, there are so many elements that you must take into consideration: dimensions, weight, and transit time to name a few. A routing guide simply complicates matters without taking these nuanced details into account.
Technology Over Routing Guides
Let’s use the example of shipping goods that could go LTL or hundredweight parcel. With the old technology standards of a routing guide, you’d have to track down the recommendations based on dimensions, weight, and transit time, reach out to multiple parcel carriers and LTL providers to get quotes, consider the specific requirements of your customers, and then make the most optimal decision. With technology, all you have to do is enter the shipment and hit “go.” Since the dimensions, weight, and transit times are inherent to the shipment, the TMS can shop across the modes that apply to the shipment information. All you have to do is use the portal to view LTL versus hundredweight pricing in real time. Easy as that!
The whole process can also be automated. In a digital supply chain, the TMS gets the info from your WMS or ERP, and the AI makes the optimal decision for you.
While you may be worried about your customers’ requirements, like a certain carrier they want to ship with, the AI can actually automate all those decisions for you. Plus, you have access to supply chain data to drive better decisions and cost savings initiatives.
You can even take data you have in the TMS, along with the access to the marketplace you have, and tell your customers how much money they’d save if they shipped an item a certain way. This can help resolve the issue of overspending in a lane because of a customer’s requirements. The data gives you hard evidence to make better business decisions.
You can also leverage vendor portals to access marketplace rates for inbound, as well as outbound shipments. By bringing inbound into your digital supply chain strategy, you gain the power of real-time visibility into inbound shipments.
Visibility means scorecarding. If you have a supplier with a lot of overdue orders, you can access that data, then decide if you need to source those goods from somewhere else instead. You can also see how many vendors are shipping to you twice in 48 hour-periods, and see if they’re short shipping you by charging for both shipments.
A common objection to getting rid of routing guides is fear of there not being enough capacity within the transportation marketplace. The secret is, the number of trucks never changes. There’s always someone willing to take your freight, but you need the right technology to access additional capacity.
Automation will help you drive efficiency and reduce costs. After all, several people may struggle to shop 200 carriers in less than a second, but AI has no trouble at all. You need to be able to make adjustments on a daily basis, and in a climate where change happens so quickly, it may be time to give up a routing guide for modern technology.