In supply chain management, freight procurement is a critical competitive factor. This is because procurement management system helps an organization to save money spent when purchasing goods and services from outside. Producing raw material is quite easy as compared to moving those goods from one place to another. This is because a lot of challenges are involved in the goods movement process. Presently, there are various shipping companies and third-party logistics (3PL) providers available which provide an opportunity to develop a strategy for each carrier type, mode, capacity, and service. By automating these processes with a hub management system will surely help you to gain the profits and also maximize the capacities while handling expenses with technology.
Check out the best strategies to elevate freight management in an organization –
Be demand driven
It is necessary to link the demand forecasts from operation planning and corporate sales so that you can see the holistic view of demand and volume requirements across all business units. When this happens, transportation planning becomes progressive. To decrease price instead of trusting on historical info, shippers can easily grip the estimated work.
Make smarter decisions by utilizing technology
Companies use advanced technology to normalize RFP responses and analyze carrier bids at different levels of granularity. By releasing procurement personnel from routine, day-to-day activities let them pay attention to developing strategic relationships with logistics associates.
Hire smart data experts
Those people understand the intricacies of transportation and bid responses can draw insights that lead to additional leverage in negotiations. Analysts can use using live shipment data and run various scenarios to simulate the impact of carrier bid responses.
Disaggregate freight spends data
When analyzing freight spend, pay attention to details. Try to find out if the carrier rates include fuel surcharges or other accessorial charges? If there exist such things then it may be impossible to conduct an apples-to-apples comparison. Information systems should evaluate each mode type individually, and display each category of charge separately.
Allow carriers some flexibility in bidding
While conducting a bid package, carriers may suggest alternative options that could create efficiencies for both parties. For example, instead of bidding on two different zones, a carrier might suggest bidding on a consolidated lane to an intermediate pooling point and split the shipments to the final destinations without any delays.
Keep yourself up to date with latest market trends
You have to identify and capitalize on upticks and downticks in transportation rates, by various modes which are also essential to create a supply chain advantage. It is essential for companies to incorporate flexibility in their procurement process and position themselves to quickly leverage spot rates with carriers.
Adopt performance metrics for carriers
Having a structured approach to monitor real data is advantageous for making future decisions. Companies should have a contract management system that incorporates a holistic view of carrier performance with key metrics that guarantees –
- On-time delivery
- Service level
- Sustainability, and capacity
Key Challenges Facing Procurement in 2019 –
Digitization and Technology
Technology is transforming day by day and supply chain leaders are forced to source categories, manage innovation and ultimately manage their supply chain risk. The way in which buyers utilize technology has made it more difficult for procurement leaders to create centralized programs. On the other hand, automation has also helped create significant efficiencies and visibility to data.
Enhanced Market Intelligence
The need for market data and intelligence has never been more significant. As markets swing and global pressure forces procurement teams to be proactive in their strategies, there arise a requirement for concise and meaningful sources of information. This information may be gathered through the use of internal data management tools or through partnerships with third-party consultants.
Improved Stakeholder Alignment
The most advanced organizations don’t achieve 100% in spending under management by accident. While centralized procurement can make compliance a relatively direct effort for some, most decentralized organizations don’t enjoy this extravagance. Therefore, equipping procurement to drive into other functional parts requires guidance and support. Procurement leaders are constantly faced with the pressure of creating credibility in their company.
Improving efficiencies and reducing costs
An agreement should achieve a meaningful level of savings, particularly if significant leverage was applied through the use of a GPO. However, the pressure on procurement to find additional savings becomes progressively problematic. Furthermore, cost avoidance initiatives aren’t typically recognized as “real” savings.
At the end of the day, the achievement of a procurement development depends on how well shippers and logistics suppliers manage the interactions with transportation partners. Solutions that erase administrative tasks are also helpful in making smarter decisions, therefore, enable organizations to control supply chain excellence as a competitive differentiator in the market. Are you looking for a company that can handle your transportation tasks seamlessly or you need shipment tracking software? Get in touch with ESSPL which is a leading global logistics software company mainly provides end-to-end TMS-solutions and covers all transport needs.