transportation resources aren't infinite

Like oil and coal, transportation capacity is a finite resource and must be carefully managed. That's the key finding of a report just out from ARC Advisory Group. "Companies can no longer treat transportation as an 'infinite resource' in their planning processes," warns Adrian Gonzalez, an analyst with the Dedham, Mass. based research firm. "Other than investing in a private fleet, you can't build up transportation capacity like you can inventory; you have to plan for it like other constrained resources."

One way to do that, says the study, is to convert demand forecasts into logistics and transportation capacity forecasts. "Companies often implement collaborative planning and forecasting with upstream vendors and manufacturing partners," says Gonzalez, "but they rarely translate these demand and production forecasts into transportation capacity requirements and share them with carriers. But some shippers are now providing forward visibility to carriers and securing capacity in advance. These shippers are receiving priority in capacity allocation over shippers that do not if only because carriers appreciate the effort these shippers are making to keep them informed."

For more on the study, visit www.arcweb.com/res/tms.