Streamlining Freight Procurement with the Power of Digital
Over the last few years, chaos has been the norm for many sectors – especially for the freight market. Supply chain issues making mainstream headlines over the last 12 months have shown the importance moving goods internationally plays in the world’s economies.
At the time of writing, spot prices in freight procurement remain, against historical trends, lower than contract rates offered to shippers. The procurement teams in many companies are still highly risk-averse, and with several good reasons:
- High fuel prices & energy supply crisis leading to higher transport surcharges
- Macro-economic uncertainties, affecting global supply chain forecasting and planning capacity
- Shifts in consumer demand, as an after-effect of a tumultuous last couple of years
These, in addition to daily challenges, have kept logistics and procurement professionals working harder than ever. The good news is there are, however, some innovative digital solutions available to help shippers get the best value for money in this fluctuating marketplace. In addition to several advantages of digital solutions detailed in this recommended ebook for supply chain leaders, this article aims to look at some of the methods in which such platforms can transform a business while providing a competitive advantage in the market.
Moving on from the basics
Transforming a business’s internal freight procurement processes, moving away from locally-shared Excel sheets and standalone data sources can bring significant advantages to procurement professionals and, critically, the company’s bottom line.
Daily, teams are re-negotiating contract rates while trying to stay on top of market rates for spot buying. Access to services that compare available rates brings already a good added value, but in most instances, there was still an element of manual intervention needed in the form of emails, calls and texts to known contacts in the industry.
More experienced procurement professionals are looking for a business-focused decision-making process that yields more competitive prices and work efficiencies. Additionally, prices, even on long-term contracts, are subject to change much more quickly – such as the latest 13.3% drop in contract rates recorded by the XSI® in January. Manually keeping tabs on this is increasingly impractical in order to act with speed as the market changes.
Integration as the next step
Integrating a specialized freight procurement platform is a relatively simple process. By pulling together prices and market rates from multiple vendors and suppliers, companies can manage shipping rates for all types of modes of transportation, while proceeding with further operations in one single place.
Specialized software logistics experts can implement a freight procurement platform that not only saves a huge amount of time, effort and cost, but also facilitates a seamless integration with key partners in the overall supply chain ecosystem and other relevant legacy systems, enhancing the procurement performance of any organization.
The result can become the first port of call for a freight procurement team tasked with getting the best value. In the same way that consumers can compare (for instance) insurance quotes, centralized freight cost data lets procurement pros make more intelligent decisions and react quickly to market fluctuations.
Many of the advantages accruing from integrating such a digital platform include:
- Centralizing all freight rates from standalone sources in one single place
- Going from months to minutes in executing RfQs
- Automating transport allocation & assigning suppliers with a single click
- Data-driven decision making, saving costs, integrating real-time data & different other personalized criteria, including sustainability
In spot and contract buying, automating procurement processes through a platform connected to multiple freight providers’ figures reduces the time spent physically finessing deals and increases the time available for strategizing and forward-planning.
Procurement hero: powered by data & automation
Additionally, the business intelligence and execution power available to enterprises when using an integrated, interconnected freight procurement platform (like that from SHIPSTA, winner of Best Procurement Technology Provider award at the World Procurement Awards 2022), can be truly transformative. Even after a few months’ use, rich data can be leveraged across organizations in a number of ways:
- Comprehensive rate history broken down by route, modes of transportation, supplier and more
- Decision-making based on market data and historical performance
- Prescriptive and predictive analysis, autonomous freight procurement
To learn more about how such a dedicated platform can turn you and your team into freight procurement heroes, sign up for a personalized demonstration from SHIPSTA. The platform will at least fire your imagination and lend some inspiration to move forward in the digitalization journey.
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