Factoring Risk into Transportation & Logistics Sourcing
In the face of continued economic uncertainty and heightened cost and margin pressures across all industries, many shippers are taking a hard look at their transportation and logistics spend. With excess capacity across most transportation modes, a wave of strategic sourcing is beginning to emerge. Shippers are looking to obtain favorable rates; carriers are looking to strengthen relationships and secure volumes. This round of sourcing, however, looks and feels different. Beyond the classic issues of carrier cost, service, and reliability, shippers for the first time are asking themselves questions about risk as part of their sourcing strategy:
- “How do I minimize the risk of disruption across the end-to-end supply chain?”
- “What carriers can I rely on through these turbulent times— which will emerge stronger?”
- “Can I both reduce costs and minimize risks— at the same time?”
These are all critical questions—answering them will require companies to “do their homework” and explicitly factor risk considerations into their overall sourcing and negotiations strategies with carriers.