What is a routing guide and what are best practices to create one

Adam RobinsonFreight Market Blog

what is a routing guide

Depending on your role within the supply chain, the idea of a routing guide can either appear almost meaningless or omnipotent. At its core, a routing guide provides a clear set of instructions and activities for effective supply chain management and execution. However, many supply chain leaders are still faced with questions about “what is a routing guide and how does it add value to our organization?” 

To answer those questions, it is essential to realize that a routing guide is not a singular sheet of paper or limited resource. And according to Brian Straight of FreightWaves, a routing guide is a living document that enables faster transportation management and keeps freight spend under control based on lane volatility, seen also within SONAR SCI Lane Acuity. However, creating a routing guide is not always an easy process, and some still misunderstand what all a routing guide contains. For that reason, it’s essential to know a few core functions of the routing guide and how they relate to the creation of the document.

1. What is a routing guide: a list of preferred carriers for tendering freight

When asked, “what is a routing guide,” supply chain leaders should first turn to the basics. A routing guide is a clear list of preferred carriers for freight tendering. In other words, it provides a direction regarding which carriers will offer the best transportation rates for that shipper based on existing contracts. That may include both short-term and annual freight contracts. As a result, enterprise shippers need to prioritize which carriers are the best and provide the most accurate service levels for each shipment. Of course, that is all subjective and again dependent on market stability within individual locations in origin/destination pairings.

The action: prioritize carriers within the routing guide based on which are preferred for shipments, depending on origin/destination data.

2. What is a routing guide: a set of rules and requirements from shippers that set rules for inbound and outbound shipping

Another way to answer the question of what is a routing guide is to think about its rules. A routing guide provides a clear set of a shipper’s rules and requirements t for both inbound and outbound freight. That includes available dock scheduling times, resources used to schedule deliveries or pick ups, certification requirements from drivers, digital documentation, centralized controls, and much more. The list is almost endless, but regardless, it is a clear set of rules and requirements that can identify and accurately route every shipment from the moment it is processed within a warehouse, distribution center or order fulfillment center. As such, the routing guide should further include rules and requirements based on location, such as a warehouse versus a brick-and-mortar store being used as an e-commerce fulfillment center. And that means shippers need more visibility, which in turn, amounts to more forecasting accuracy in all decisions.

The action: be specific with requirements relating to volume, pickups, deliveries and other factors.  

3. What is a routing guide: a series of instructions to handle delays or changes within shipping demand

The routing guide further provides direction on what to do when delays or changes occur. That is especially important when considering market volatility and the risk of increased tender rejections. After all, increased rejections mean delays within shipping. That is among the most fundamental and straightforward principles in supply chain management. But, the distinction and value of the routing guide lie in knowing what to do to preempt and address those delays, using predictive freight rates, to (hopefully) prevent the real impact to the customer. For instance, it may be necessary to reroute the shipment, move it to another load or mode, dispatch a new driver or perform other necessary activities to ensure compliance with the routing guide.

The action: include dynamic considerations with multiple “what if” scenarios to mitigate disruptions. 

4. What is a routing guide: a digital resource that seeks to reduce high transportation costs

The routing guide is a digital resource because no one wants to use paper routing guides anymore. Supply chains are too complex to rely on archaic, handwritten processes. However, digital routing guides do exist and may coincide within the same digital documentation capabilities as an electronic bill of lading (e-BOL) or electronic proof of delivery (ePOD). As such, enterprise shippers need to take advantage of centralized and digital document management capabilities.

The action: ensure your routing guide is accessible and available via the web.

5. What is a routing guide: a list of standards that carriers must meet for carrier-of-choice eligibility

The routing guide further provides direction on what is deemed measurable and accountable among carriers. In other words, it is a list of standards that carriers must adhere to in order to maintain or apply for carrier-of-choice eligibility. For instance, carrier-of-choice eligibility may include preferential treatment, commitment to certain volume requirements, access to earlier dock appointments and more. According to InTek Freight & Logistics, the routing guide may contain everything from labeling instructions through setting penalties for failures. It is a critical tool for carriers that wish to attain carrier-of-choice status. 

The action: ensure your routing guide is the go-to resource for carriers that want carrier-of-choice status while building your carrier scorecard from the requirements set forth within the guide.

6. What is a routing guide: an arbitrator to avoid confusion and disputes in complex supply chains

There is another more complex and finite value proposition within a freight routing guide. It provides a source of arbitration to avoid confusion and resolve disputes within the supply chain. A good routing guide identifies the process necessary when errors occur, damage happens, or other events result in problems. And it may include consequences or prescriptive actions for carriers, shippers or other relevant freight management parties and supply chain partners to follow, while keeping a lane-by-lane and O/D granular basis.

The action: include corrective actions and processes to handle issues that may arise and integrate that information with your existing TMS or other systems of record.

Boost the confidence of your network by developing a definitive, agile routing guide with the proper data-driven history

Shippers can reduce routing guide failures by putting more data into your lane-by-lane activities, paid rates and forecasted volatility. That amounts to knowing when to expand the network, onboard new lanes and enforce penalties against carriers. And SONAR SCI Lane Acuity can kickstart the whole process by bringing the collective data together. Request a SONAR SCI Lane Acuity demo by clicking the button below today.