October 23, 2018

Enterprise Risk Management in the New World of Rail Logistics

The transportation industry is entering into a new generation with great potential to be vastly stronger than the previous one. Rail freight has seen increased rates, and is typically less expensive than other modalities.
Shippers are switching their way of thinking about their logistics,

and rail seems to be the way the trend is going.

What must be noted is the ever-growing importance of investing in technology to best capitalize on the efficiency of rail logistics in terms of safety, speed, reliability, and most importantly, of risk. In a world in which everyone demands information as quickly as possible, the task of enterprise risk management has become increasingly difficult without the use of technology.
One of the biggest risks your company can assume is with expense. It comes in two basic forms: inflation and unpredictability. Rises in the market can be difficult to forecast, but to gain a semblance of control, you can set longer-term contracts to cut impact of price hikes in the future.
The market has a way of moving in brisk and abrupt ways that are exceedingly fickle. Be sure to keep track of both upticks and downticks in cost. A drop in the market may seem serendipitous, but it can motion to inconveniences in scheduling logistics.
One way to cut down expenses is through a positive train control system. Trains are monitored and stopped remotely, requiring less manpower. Some have the option of trip optimizer systems, functioning the way autopilot does for an aircraft, for best use of fuel and efficiency.  
Quality is never just about the end product, but it will surely show in the end product if it is not on the forefront of your team’s mind from the very first step in the supply chain. Failures to deliver quality products to the consumer have austere penalties. From an immobilized assembly line to receiving a package with broken packaging, quality must be appraised at every stage of the process.
Software now exists to be fully dedicated to quality management, automating a large part of your production process, and leaving little room for human error. Encourage your suppliers to adopt these same procedures to their own practices and watch your risk for quality go down immensely.
Quality also has a lot to do with the physical locomotives and railcars you are using.
The average locomotive is designed to last 30 years, and for railroad, 50. Be sure to keep up with maintenance costs and plan for unexpected expenses. The older your transportation is, the more important it is to keep track of all maintenance needs.
Only a lucky few have yet to experience it: we order an item online and weeks pass by without a delivery. Logistics and finance teams are often the first to be accused when it happens. This is not only relevant to the delivery of physical goods, but to intangible ones, as well, from graphics artwork to an email confirmation of an appointment.
Being timely is integral to an efficiently run business space. Delivery is at risk when it is either not delivered at all, or sent late. Managing what your delivery is based upon can be tedious, but is extremely important to confirm possibilities of what could, or could not, be delivered to your client.
Track delivery metrics in your ERP or customer relationship management tool (CRM- find great recommendations here) to better understand how delivery metrics and supply chain issues affect your customer sentiment. You may be surprised with how many clients increase investment with you because of high on-time delivery metrics.
Reputation is one of the most unspoken areas of risk according to Forbes, and it’s what the general public believes is extremely important. The masses have judgments on how a business should conduct themselves, and when a brand has blemished its reputation, it is hard to salvage a sense of moral code in the eyes of the public as well as the other businesses you work with.
Internal issues such as overdue payments to suppliers can get out to the public, and though it may be a business norm for many, the public does not think highly of it in terms of morality. Be sure to look to the actions of your suppliers, need be. Be sure to defend yourself with contracts, but also be proactive in applying and censoring your business benchmarks, from a micro to a macro level.
Part of a good reputation means working with other companies and collaborating. Railroads are good at many things, one of them being the ability to transport a very large amount of goods over long distances in one go. This can mean a desire not to take advantage of other traditional supply chain processes. Intermodal marketing companies manage important intermodal goods shipments so you don’t have to.
Other private contractors administer services, from shortlines, ramps, and intermodal to transloading terminals. Streamline the process for yourself by collaborating with other companies whose jobs are solely dedicated to doing the jobs you may be outsourcing to several other small agencies, or doing yourself.   
The world of logistics is a fast-paced and ever-changing one, and transformations in energy and digital technologies are bringing more and more people to rail logistics as an industry leader.
From Europe to China, rail logistics are surpassing their rivals who have been slower in investing new technologies and adopting them. Capitalize on this growth in the best way possible by evaluating your business practices every step of the way with better enterprise risk management.

Author Bio:

Neha Tandon is a writer for TechnologyAdvice. She has a Masters of Arts in Journalism from Syracuse University’s Newhouse School. With a background in marketing, public relations, and advertising, her true passion is for business journalism.

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