6 Freight Procurement Strategies to Transform your Supply Chain
Today, freight procurement is more than just about the price. It is one of the most crucial parts of the supply chain and has the potential to enable high-performance levels and drive ROI to a major extent.
The ongoing year has been a year of disruption and transformation for the freight procurement industry owing to the coronavirus pandemic, geo-political tensions, environment-related policies, and more. But true to the saying that disruption paves the way for new growth, the present crisis will also mark the beginning of a radical change in the freight procurement ecosystem.
While the present circumstances are bound to act as a catalyst in transforming the industry, there are quite a lot of challenges and complexities that organizations will have to overcome in the time ahead.
In light of such challenges, as a supply chain professional, you must be wondering if you truly have a strategy in mind to keep goods moving in the best possible way or whether you are just trying to keep the wheels spinning.
In case you do not have a freight procurement strategy in place, here are our pointers to elevate freight management in your organization to build a resilient supply chain.
What can you do better to control your freight expense?
Cost is a very important factor to ensure that you have a robust freight procurement strategy. Another major factor is identifying who offers cost-effective freight rates as well as provides good service. This is crucial to your bottom line and can drive significant cost savings if implemented well.
Automate your freight procurement process from end-to-end
Select freight procurement solutions that come built-in with the latest versions of the technology. Automating routine and repeated purchasing processes will reduce the overall administrative effort and leave the procurement team with a lot of time to concentrate on more crucial and strategic tasks.
Enlist the services of data analysts
Always bring in smart data analysts for additional leverage while negotiating. They understand the complexities of the freight procurement process and will be better equipped to analyze carrier bid responses with the help of live shipment data.
Evaluate performance metrics for carriers (KPIs) – to analyze freight expense.
Making use of suitable KPIs for measuring carrier performance will help you to identify the right carriers for your business and check for any gaps in the process. This also enables you to come across better cost optimization strategies, make more data-intensive decisions and adopt a proactive approach to any challenges along the way.
Maintaining a carrier performance scorecard with metrics such as on-time pickups and deliveries, several damage claims, billing accuracy, and related transportation expenses will help you to obtain cost control and capitalize on profitability. Any digital procurement software will provide you with these features on a unified dashboard for easy accessibility of data.
Keep a close watch on changing market trends
The ability to quickly capitalize on fluctuations in transportation rates, by various lanes and modes, is crucial to maximizing your profitability. Companies should incorporate flexibility in their procurement process and position themselves to quickly leverage spot rates or negotiate discounts with carriers.
Adopt a reverse auction method
Digital procurement solutions offer reverse auction methodologies where multiple vendors compete by bidding against each other by submitting successively lower-priced bids during a scheduled period. This way, you get the vendors themselves to give you their best possible rates for you to obtain the best deals.
Building an integrated freight procurement strategy
An integrated supply chain is the most holistic and logical way to increase your productivity and the efficiency of all your rate procurement strategies. Better information and more sophisticated analytics are available, which can be leveraged through your digital supply network. This will help your company to comply with routing guides, track supplier safety metrics, and compare actual safety, fuel, and emissions performance against RFP and budget forecast numbers.
And, when unexpected issues arise, your company is in a better position to respond quickly and effectively—minimizing the risk of disruptive events in the supply chain.
Easier rate management and collaborative transportation sourcing are the trends that you need to keep up with today in the world of freight procurement.
GoComet enables transparency in the procurement of freight rates, gives you the power to increase productivity, and reduces your freight procurement costs with its Recursive Rate Reduction Auction system. Engage with multiple trusted vendors and get the best deals at the best price, every time! Find out more about strategic freight procurement here.