Data is arguably one of the most valuable resources that third-party logistics providers (3PL) and freight brokers have, but in many cases, little is being done to maximize the value that it can provide.
The right data can help optimize operations, improve customer service, and grow revenue. But data can also do much more than that. Data can help you strengthen your carrier relationships, lower your days sales outstanding (DSO), and improve your cash flow. This post will explore how 3PLs and freight brokers can leverage data to achieve these goals.
Carrier Relationships
One of the most important factors for the success of any 3PL or freight broker is the quality of carrier relationships. Carriers are not just vendors; they are partners who help deliver value to your customers. Therefore, it is essential to maintain good communication, trust, and loyalty with them. This is where having access to the right data comes in.
Data can help you identify the best carriers for each shipment based on their performance, availability, rates, and preferences. This enables you to match the right carrier with the right load, reducing the risk of delays, damages, or disputes. You can also use data to monitor the status of each shipment and provide timely updates to both customers and carriers. This communication serves to enhance transparency and accountability which will improve customer satisfaction and retention.
Second, data can help you reward your carriers for their service and loyalty. Organizations can use data to track the quality and frequency of each carrier’s deliveries and offer incentives such as discounts or bonuses. Additionally, data can be used to provide feedback and recognition to carriers and solicit feedback. This fosters a positive and collaborative relationship with carriers and improves their loyalty.
Data can help resolve any issues or disputes with carriers quickly and fairly. Data can be used to verify the accuracy of invoices, claims, or complaints. Data can also be used to negotiate better rates or terms with carriers or find alternative solutions if needed. This will reduce the likelihood of conflicts or litigation and preserve your reputation and credibility.
Days Sales Outstanding
Another key metric for any 3PL or freight broker is the days sales outstanding (DSO), which measures how long it takes to collect payments from customers. A high DSO means that there is a lot of money tied up in accounts receivable, which can negatively affect your cash flow and profitability. It is always advantageous to lower DSO and using data effectively can help accomplish this.
Data can help you improve your invoicing process and accuracy. Data is key to automation your invoicing process which will eliminate manual errors and delays. Data can also be used to validate the accuracy of each invoice, ensuring that it reflects the correct rates, services, and charges. This will reduce the chances of errors or disputes that could delay payments.
Data can also help optimize payment terms and methods. Data analysis gives insights into payment behavior and preferences of each customer and enables the ability to offer them payment terms and methods that suit their needs and expectations.
Data also allows organizations to monitor and manage their accounts receivable effectively by tracking the status of each invoice and payment and identifying any overdue or delinquent accounts. Additionally, it can be used to prioritize collection efforts based on the amount, age, and risk of each account.
Cash Flow
Finally, one of the most critical aspects of any 3PL or freight broker business is cash flow management. Having a healthy cash flow provides businesses with more flexibility and enables them to invest in long-term growth. Using data effectively can help create robust cash flow in the following ways.
Having the ability to forecast cash flow accurately and realistically is a benefit to any business. Data can be used to project income and expenses based on historical trends, seasonal patterns, and current market conditions.
Organizational data can also be used to anticipate any potential fluctuations or risks that could affect cash flow, such as changes in demand, supply, or costs of services and goods.
This insight helps plan cash flow accordingly and avoid any surprises or shortfalls.
Access to data can also help optimize cash flow management strategies and tactics by having the ability to analyze cash flow performance and identify any areas of improvement or new opportunities.
Data is not only a valuable asset for any 3PL or freight broker business but can be used as a powerful tool for boosting growth and performance. By leveraging the data within the organization, freight brokers and 3PLs can improve carrier relationships, lower days sales outstanding, and improve your cash flow.