To run your business successfully and ensure smooth functioning of your supply chain, you must get your freight sourcing and procurement right. Unfortunately, with the present global trade environment, ensuring efficiency while sourcing freight can be tricky.
However, a strong team that understands your business, is well-informed and makes informed decisions can go a long way in driving profitability for your company irrespective of the circumstances.
Here are some must-haves for any competent freight sourcing team
Thorough market knowledge: More the better
Your freight sourcing team needs to have a deep understanding of the market your business is in, to make the right decisions. It’s only with a great deal of knowledge and awareness that your team will be able to effectively handle all requirements of your business.
In a space that involves multiple stakeholders, your team should be aware of whom to contact for each activity concerning your business. Besides, they also need to know the shipping requirements for each shipment based on the nature of the cargo, type of packaging required, whether the shipment requires Less than Container Load (LCL) or Full Container Load (FCL) and more.
Based on this understanding, the team then needs to choose the right suppliers, freight forwarders and carriers. The sourcing team also must be aware of the wide range of contracts that might be in place to make sure that those contracts are fulfilled. Otherwise, your company may end up getting a penalty charged for non-fulfilled contracts.
Benchmark rates for best rates each time
One of the most practical ways for your freight sourcing team to ensure that they’re paying the right rate for a shipment is to rely on freight rate benchmarking.
Freight rate benchmarking allows you to compare the price you are paying for your shipment with the real-time rates for similar shipments prevalent in the market. It also facilitates route optimisation. By leveraging real-time data on rates, your team can instantly make sure that they are not paying more than what’s needed.
Besides, when your team uses freight rate benchmarking, it becomes easier for you to judge their efficiency too. Above all, the beauty of benchmarking rates is that irrespective of how big or small your business is, it is going to benefit you.
Negotiate well, leverage reverse auction
With a proper understanding of the business and market, the next step is to put the knowledge gained to good use while negotiating rates. The golden rule today is to have multiple vendors and move away from the traditional way of negotiation.
Today several Logistics Resource Management platforms help you secure the best deals every single time with the help of reverse auctions. How does it work?
Unlike the age-old way of exchanging emails and making calls, then dealing with several excel sheets to figure out the best deal, now there’s a better way. Present-day LRM systems allow you to create and share inquires with all your vendors simultaneously.
Once you invite quotations, your vendors compete against each other by submitting successively lower-priced bids during a stipulated time. Throughout the process, vendors are given ranks based on their quotes and their identity stays concealed. The idea is to get every vendor to aim for the first rank, shrink his rates and thus, increase his chance of winning business.
The result? While you sit back and focus on more important tasks, your vendors automatically compete to offer you the best deal.
Big data, your biggest gold mine
Your supply chain generates a massive amount of data at every single step and your sourcing team must know how to leverage it well. Understanding and analysing the data, drawing insights from it and sharing relevant information with your customers can make way for a great deal of efficiency.
Moreover, the emergence of digital solutions has simplified data science to the extent that all you have to do is identify the right tool or system for your business and the solution will do the rest for you. Once you digitise your supply chain, the system will record data points for you, automatically analyse them and provide you actionable insights instantly.
Keep learning, keep growing
The key to ensuring your freight sourcing team is efficient at their work is to create a channel for them to stay updated constantly with the latest developments in the market. The more their willingness to learn and use the insights gained in their routine work, more optimised your procurement and freight sourcing process will be.
If you would like to learn about how we at GoComet can help your freight sourcing and procurement team become more efficient and reduce costs for your business, reach out to us here today.