transportation Forecasting in supply chain

Effective supply chain management is a complex process that involves multiple interrelated factors. Supply chain forecasting, specifically transportation forecasting, plays a pivotal but neglected role in this process. While many businesses invest considerable time and resources in forecasting their inventory and production needs, transportation forecasting is often overlooked.  Carriers, which form a critical link in the supply chain, are always expected to be available…like water coming out of the tap. 

The problem is that carriers are different from water. Availability can vary substantially. Even companies with deep routing guides say three or four carriers deep, see the impact that “going deep” can have on cost and service. Worse, huge spikes in need can often drive a mad scramble for trucks. While it’s impossible to manage customer demand, deployment transportation accurately and, more importantly, level load. We’ll talk about that more later.  However, the value of this process cannot be overstated. Companies can gain a cost, service, and strategic advantage by incorporating transportation considerations into their forecasting processes.

Transportation forecasting as a part of supply chain forecasting

Transportation forecasting helps companies secure transportation capacity earlier by predicting transportation needs. Consider the two situations:

  1. Customer shipments. Well, we know these can be highly variable, and you don’t truly know what you have until the very moment the order is in your hand; it is possible to use the forecast to preposition a portion of expected transportation needs by region. For example, if the forecast says you’ll ship ten trucks to the New York metro area, it may be valuable for you to pre-book 5 of those.
  2. Replenishment shipments. Suppose the inventory forecast flows through to the supply planning system. In that case, it generates a set of replenishments, which can be turned into a transportation forecast for the, say, the next 30 days. Because the shipper has complete control over how many loads it deploys, it can tender loads 3-5 days earlier to lock in the best price/highest service carriers.

This proactive approach enables businesses to transport goods efficiently and without delays, even during peak demand. Transportation forecasting also helps companies anticipate and mitigate potential issues along the supply chain—for example, unsustainable throughput requirements at a distribution center. By being prepared in advance, companies can minimize disruptions and keep operations running smoothly.

Risk Mitigation and Security

Businesses can achieve significant efficiency gains when replenishment transportation forecasting is integrated with smoothing techniques. Supply cleaning systems react to customer demand and the need for high service. Unfortunately, this generates a highly volatile Lane-by-Lane shipment pan. One day, you can be shipping three loads on the lane the next day, 23. From a transportation perspective, this is unsustainable. It’s possible to smooth this flow using mathematics by looking over the complete range of dates and managing the capacity bottlenecks in warehouse space, site, throughput, and preferred carrier capacity and cost. Furthermore, forecasting transportation needs helps companies avoid relying on unknown carriers or resorting to load brokering at the last minute. This proactive approach minimizes the risk of double brokering, cyber threats, and other security issues, safeguarding the company’s reputation and bottom line.

Cost Savings and Environmental Responsibility

Transportation forecasting also translates into tangible cost savings. Companies can lower transportation expenses and improve profitability through the forecasting and smoothing process. The cost savings from one shipper was “many millions of dollars.”  Simply put, using the right carrier in a smoothed way has been proven to:

  • Reduce the use of “nonpreferred” carriers and reduce cost
  • Increasing reliability and thereby improving the in-full, on-time (OTIF) measure implemented by many retailers
  • Cut overtime and eliminate detention

Transportation forecasting contributes to environmental sustainability in addition to cost savings. Companies can protect the environment and promote greener logistics by reducing unnecessary mileage, optimizing fuel consumption, and minimizing emissions.

In the long term, carriers see less volatility with transportation, forecasting, and level loading of the supply network. They can reduce their cost as a more predictable flow, enabling them to eliminate some of their empty miles. These two have clear environmental benefits.

In conclusion, transportation forecasting can assist companies in various ways. It allows them to preposition capacity by early tendering, which enables them to avoid issues that may arise. Combining transportation forecasting with smoothing (LevelLoading) can lead to significant benefits. It helps businesses avoid the pain of using unknown carriers or brokering loads, which can expose them to double brokering and cyber issues. Additionally, transportation forecasting can help companies save money and contribute to saving the environment.