Transportation forecasting is a technology that deserves the attention of supply chain leaders. Few know about it, and you are about to become one of them.
This high-impact, low-risk solution boosts the effectiveness of supply chain demand planning and transportation management systems (TMS). It’s also one of the most overlooked and misunderstood technologies, which works to the advantage of early adopters.
Gartner®’s Hype Cycle™ provides a graphic representation of the maturity and adoption of technologies and applications, and how they are potentially relevant to solving real business problems and exploiting new opportunities. The latest “Hype Cycle™ for Supply Chain Execution Technologies, 2022” includes transportation forecasting and recognizes flexis as a Sample Vendor. According to Gartner, “Companies must be able to forecast future transportation requirements, so they can collaborate with carriers to plan and lock in capacity.” That is what flexis products do.
For a technology destined to become a cornerstone of supply chain management, it’s surprising how difficult it is to find an S&OP solution that extends into transportation and vice-versa.
Part of the problem is that S&OP forecasts overshadow transportation. Many developers do not understand the intricacy of transportation, and shipping is an afterthought for many organizations. The general assumption is that S&OP drives transportation, so shipping operations exist to support it.
Considering shipping after the fact is the opposite of using a transportation-centric model, which views all supply chain processes as supporting transportation. Introducing forecasts will reveal which end is wagging the dog and likely steer a business towards this model.
Adding to the above problem is confusion over transportation forecasting and planning. Neither activity adheres to a strict definition, and there is some overlap. Both are poorly understood outside the logistics department.
Most shipping operations employ some level of transportation planning, and outsiders often mistakenly equate it to forecasting. Here’s how this article distinguishes transportation planning and forecasting:
Transportation forecasting supplements traditional TMS and bridges the gap between S&OP and shipping. Integrating these functions enables the entire business enterprise process to align with shipping, removing a significant obstacle to supply chain optimization.
Transportation forecasting is important for the same reasons as demand forecasting, and it’s arguably more significant in light of current trends.
After two and a half years of fighting a supply chain wildfire that’s not letting up, supply chains are resigned to a volatile future. Transportation networks mirror market volatility and vice-versa, so securing transportation capacity is a concern, and forecasting can help.
Volatility makes it difficult for shippers and carriers to predict capacity requirements. Companies that share granular shipping projections facilitate better planning for transportation operators, mutually reducing costs and risks.
Such collaboration is attractive to carriers, and shippers with detailed transportation forecasts receive a higher priority and better pricing. With supply chain volatility expected to continue, shippers will find this collaboration is required to secure reliable transportation.
Effective forecasting improves future visibility, increasing operational agility. More preparation is possible to ensure greater flexibility and better decision. A few illustrations of how transportation forecasts improve agility follow:
Continued supply chain volatility means process improvements must continue to improve optimization. Integrating S&OP and for OEM’s and manufacturers also Advanced Planning & Scheduling solutions, and transportation forecasts is a significant enabler of supply chain optimization, and it’s only a matter of time before it’s the norm. In the meantime, companies can gain a significant competitive advantage by implementing transportation forecasting now.
Gartner, Hype Cycle for Supply Chain Execution Technologies, 2022, Dwight Klappich, 27 June 2022.
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