While digital transformation has been slow, if not stagnant in the logistics industry, recent times have witnessed rapid developments in this space. With more and more supply chain professionals adopting digital alternatives to traditional methods by automating RFQ management, opting for digital freight procurement strategies and purchasing real-time container tracking software, the time has come for digitalisation to shine in this industry as well.
Automating your freight procurement processes enables a world-class performance and drives ROI to a major extent. Emerging digital tools in the procurement field boast of superior results by taking the data-driven decision making to the next level and enabling the procurement teams to always be a step ahead. These developments are set to realise the goal of every company to gain a competitive edge in every aspect of their business over their competitors.
Not only do digital procurement technologies decrease the amount of time procurement teams spend on getting invoices processed but also free up time for them to work on better negotiation and cost optimization strategies. According to a survey conducted by McKinsey, many CPOs working on digital procurement programs expect a 40% increase in gross savings, and a 30-50% less time spent on transactional sourcing.
Digital Freight Procurement: The definition
Succinctly put, freight procurement is the process of acquiring third party logistic service providers for transportation of freight, at the best rates. Everything from assessing logistics partners to selecting the right fit for your company to transport your freight from one place to another comes under freight procurement, also known as transportation procurement.
To carry out efficient freight procurement, companies are turning towards digital tools and software that simplify the entire process. This is termed as digital freight procurement or e-procurement.
E-procurement providers can enable shipping companies to be in control of their supply chains at all times. With real-time visibility and transparency into rate negotiations, transport routes, and shipping schedules, these digital solutions are well-equipped to provide a hassle-free freight transportation experience.
Why is the supply chain industry leaning more towards automating their freight procurement process?
Thanks to the advances in digital procurement solutions, the logistics industry can now proactively manage the complexities and costs involved in shipping goods. The following are some key benefits of digital freight procurement.
- Reducing freight expenses
With automated purchasing processes, a lot of paperwork, manual labour and rework due to human error, is cut down. This helps in driving cost savings to a large extent and leads to greater ROI in the long run.
- End-to-end visibility over the freight procurement process
With a single dashboard for all the shipment related information, digital procurement tools provide end-to-end visibility over freight spend as well as procurement. By enabling timely and automated reporting on invoice payments, orders purchased and related transactions these tools help you minimise delays.
- Improved productivity
The procurement teams will have a lot of time on their hands to take up strategic work like negotiating rates, analysing costs, assessing the right carriers for their company and so on, with digital procurement tools taking care of mundane purchasing tasks like bid validation, checking for duplicate invoices and comparing multiple quotes from various service providers. Thus, digital procurement will lead to increased productivity.
- Better relationships with customers
With everything available on a single platform, customers are in for an organised and fast experience. Improved customer experience paves the way for building stronger business relationships with them.
- Data-driven decision making and increased agility of freight operations
Due to transparency into the procurement process, actionable insights are available for you to take important decisions based on tried and tested information. They will provide a roadmap of sorts for predicting trends in demand and supply and enable you to be prepared.
How best can digital freight procurement strategies be leveraged for enhanced freight management?
The economic and strategic benefits of digitizing procurement are vast, but the influx of freight procurement technologies in the market has made it difficult for companies to figure out where to start. Here are some intelligent strategies to keep in mind when adopting a digital procurement strategy for your company.
- Utilize the latest technologies
It is always advisable to select software that comes built-in with the latest versions of technology that is being used. Automating routine and repeated purchasing processes will leave the procurement team with a lot of time to concentrate on more crucial and strategic tasks.
- Thoroughly analyse freight spend data
Choose a solution that provides capabilities to analyse and evaluate your freight spend. Information systems should evaluate each charge type like fuel surcharges or accessorial charges individually, and display each category of charge separately.
- Customize digital procurement solutions
For best results, select software that allows a great degree of flexibility and customizability. This enables you to make the most of the software and tailor it exactly to your company’s needs and requirements.
- Monitor KPIs to measure carrier performance
Identifying and making use of suitable KPIs and benchmarks for measuring carrier performance will help you to identify the right carriers for your business. This also enables you to analyse cost optimization strategies, make better 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.
Gain superior value via digital procurement…
Digital procurement can enormously enhance the performance of the shipping industry due to improved productivity, and easy visibility into day-to-day operations. Clients also experience better communication and collaboration due to the digital procurement framework.
Reaping the numerous benefits of digital procurement can go a long way in streamlining and building a resilient supply chain more than ever before.
GoComet enables you to secure the best deals through its automated, compounded negotiation system and drive double-digit savings each time that you ship.
To know more about digital freight procurement and how best to negotiate the cheapest deals for your freight, talk to us today!