The Cost of Reactively Managing Your Allocation
Date: 20 July 2022

Poor allocation management solutions can lead to massive cost increases across the supply chain. Despite these costs, many companies still rely on legacy processes and inefficient means of managing data. As reported by McKinsey & Company, “Close to three-quarters of supply-chain functions rely on the simplest method [of managing allocation]: spreadsheets.” Working with old-fashioned spreadsheets in allocation causes problems to abound. Their challenges grow even more complex when shippers fail to optimize parts of the supply chain traditionally believed to be beyond their control – such as their allocation. 

Understanding better tools for allocation management can help ocean shippers prioritize cargo and drive lower landed costs. Proactive allocation management fueled by data-driven visibility solutions allows shippers insight into their allocation process and liberates shippers to make real-world logistics decisions in real-time. When made accessible through an easy-to-use, cross-functional interface, data-driven visibility solutions can help your business turn allocation management from a vulnerability into a strength. 

But first, shippers must understand how static or disorganized data in their allocation process contributes to higher costs. This blog will explore the potential impacts on carrier relationships, back-office delays, and damage to the customer experience and brand.

1. Damage to Relationships.

One of the most worrisome risks in reactive allocation management is the potential for missed deliveries. Missed deliveries can have costs far beyond the actual price of a failed contract. Missed deliveries can damage relationships, cutting shippers off from future contracts and hurting their bottom line. 

In an uncertain logistics environment, carriers and NVOs are looking to partner with “shippers-of-choice” that can provide certainty and supply chain transparency from contract to delivery. Shippers can provide clients with the necessary clarity by partnering with contract visibility platforms. Contract visibility can give shippers the flexibility they need to stay competitive in a dynamic logistics environment. 

Proactive allocation management, fueled by a tech-powered contract visibility solution, can give businesses the advantage they need to deliver on time and at scale. Providing the data businesses need, proactive allocation management takes the guesswork out of shipping. 

2. Added Time and Cost to Your Team.

Reactive allocation management can cost shippers valuable efficiency, leaving staff scrambling to compensate for lost time. Often, these inefficiencies result in huge labor costs as teams work overtime to accommodate crises while still resulting in delayed or missed deliveries. 

These costs can quickly spiral out of control for shippers. Shippers, forced into a difficult position, spend more time managing data manually than they had previously planned, and the cost is ultimately incorporated into the business. Now paying more for shipping, businesses are forced to divert funds to cover increased shipping costs. Though the prices of reactive allocation management start small, they can quickly balloon to affect bottom lines. 

Proactive allocation management, fueled by data-integrated visibility platforms, gives shippers the information they need to utilize strategic staffing strategies and avoid worst-case scenarios. Strategic resource planning, enabled by optimized allocation, can help shippers maintain their bottom line while their deliveries are made on time. 

3. Damage to Customer Experience and Brand Reputation. 

In today’s world of same-day delivery, your customers’ expectations when it comes to product availability are higher than ever. Reactively managing your allocation means that companies put customer satisfaction on the line, and in today’s competitive marketplace, that’s just not a risk business can afford to take. 

For businesses and shippers alike, reliability is everything. For retailers, mismanagement of allocation and late shipment arrivals can mean disappointed customers who begin turning to other products–after all, how can customers rely on a product that isn’t there? For shippers, these missed shipments can have catastrophic consequences and can quickly spoil previously untarnished brand images. 

By partnering with a proactive allocation management solution, shippers can provide the visibility they need to survive and thrive in a competitive marketplace. Visibility solutions allow companies to access all of their contractual obligations in one place, accessible by all teams, ensuring that shippers deliver on time and customers stay happy. 

Avoid the Direct and Indirect Costs of Reactive Allocation Management with NYSHEX.

Reactive allocation management puts client satisfaction on the line, leaving businesses vulnerable to even minor logistical hurdles. With data-integrated proactive allocation strategies fueled by a real-time visibility solution, shippers can provide their customers with the products they need to stay competitive in a cut-throat logistics environment. 

Request a demo with NYSHEX today, and see what proactive allocation management can do for your business.

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