Today’s dynamic logistics and supply chain environment requires strategic planning; execution of strategy; measurements to goals; analysis against industry benchmarks; and continuous improvement. However, negotiating quotes for your freight remains a static process. Freight procurement via an RFQ (Request For Quote) is plagued with inefficiencies when done manually. With logistics operations accounting for nearly 95% of your time, a lack of a single platform as well as a pre-existing bias in the marketplace and sub-optimal rates, are combining to damage the revenues of your business.
Limitations of Manually Negotiating Freight
As soon as your RFQ is issued, your logistics team has to engage in a plethora of emails and calls to negotiate with your LSP (logistics service provider) to receive an optimal quote. This situation becomes increasingly complex with spot contracts. The logistics team has to manage to get all the vendors onboard, inform them of the RFQ, and start negotiating the quotes while facing constant time constraints.
Your LSPs have very little motivation to drive their prices lower due to the absence of competition. Shipments might get delayed for days until you find a fair quote. This process puts the vendors in the driving seat and leaves your logistics team with little to no control: the result – you pay more.
Due to this increased freight spend, the onus falls on the finance teams to compensate for these losses. There are three major takeaways from this process:
- The sheer volume of time, effort, and resources wasted on this can be allocated to other projects. The process has been in place, unquestioned, for so long that companies seem to have trivialized the need to change it.
- The pressure to execute is so high that expecting your team to negotiate and win the best deal at the best price is unfair.
- Absence of insights and lack of transparency in negotiations gives vendors an upper hand in the process.
Inefficient manual freight negotiation (Image Credits: Super Procure)
This begs the question—is this really how you would like to invest your resources?
Automate your Freight Negotiations with GoComet
Continuous manual intervention in your freight negotiation gives way to automation, and this is where GoComet steps in. GoComet solves your negotiation problems in a simple yet effective way through compound negotiation savings generated in part through a reverse auction. Reverse auctioning or recursive rate reduction enables the vendor to take part in a competitive bidding process. GoComet connects the vendor and the manufacturing team on their platform. Once an RFQ goes out, your selected vendors are immediately alerted, and it sets off a bidding race. Every time there is a new ‘best price’ in the bidding process, the platform notifies the vendors and discloses their current standing in the bid queue. Crucially, however, the amount of the prevailing quote is not revealed.
How does this solve the problems posed earlier?
- Little to no manual intervention is needed. After creating a new inquiry, the vendors battle it out, giving you the best rates in limited time.
- The platform centralizes all the transactions making it easier for your teams to analyze the ongoing auction and eliminates the hassles of emails and calls.
- Compound negotiation gives you live data on the auctioning process, and you barely have to move a muscle. It also simultaneously engages the vendors.
GoComet’s freight negotiation platform
Let’s see what this means for your logistics team:
- They do not have to spend time on delegating each quote and informing each vendor
- Eliminates any scope for delays and ensures that your shipments move on time. They have the final say on the routes, costs, and timeline.
Let’s see what this means for your finance teams:
- Once the quote is registered by the platform, any discrepancies between that and the final invoice are immediately taken care of, leaving no room for any errors.
- Due to the lowest rate, there are significant savings on freight spends
- The software gives them visibility in logistics procedures with effective audit and compliance norms and makes manual auditing a thing of the past.
This gives you the power to make your decisions and not rely on the agents. With all the resources and time that you have saved, how can you further optimize the performance of freight management?
Optimizing your Freight Management with GoComet
Moving aside from the mechanics of the process, let’s breakdown the big picture. GoComet’s smart quotation management system helps you save time in your business in various areas:
- Due to the automated RFQ generation, sharing and negotiation, your company saves 110 minutes per RFQ.
- Due to the automated compilation of reports, your company saves 4 days per month. Also, there is a reduction in report generation and updation by 90%.
- Due to the inbuilt audit process, your company saves 25 minutes per shipment.
When you scale up the time saved on this to the thousands of freight transactions and staff-hours put into negotiations, it leads to a 35% decrease in the time spent on logistics operations. It essentially translates into faster growth and increased output while reducing the resources involved in freight negotiations.
GoComet optimising freight negotiations
Automation will also help in saving your employees from mundane processes and engage them in strategic tasks. Once you adopt the GoComet platform it will take care of all your freight needs and result in an eight-fold increase in strategic tasks. There are multiple benefits of these strategic engagements, such as :
- Building vendor relations: The time and resources saved on endless negotiations with your freight forwarders can help build better vendor relationships. We help you retain your pre-existent vendors or onboard a new vendor to drive quotes even lower.
- Finding better routes: Analyzing the PnL of each lane and carrier routes can help you find better routes that the carrier can take and save up on costs.
- Avoid rollovers: The time saved can also be used to better your relationship with shipping lines. It will give you better visibility into the shipping line carrying your freight and help avoid possible rollovers and other unnecessary operational charges.
- Better customer relationship: Customer relationship is vital to any organization. The time everyone saves helps build better relations, reduces customer acquisition costs and allows for the re-allocation of staff to more value-added, customer-centric tasks.
- Paying more attention to each shipment: Due to the lack of tracking of shipment or lack of resources, there is no visibility on each cargo. It can lead to expenses such as demurrage and detention costs. Better attention can be paid to each cargo, helping you save more on such unintended expenses.
- Data Analytics and Reporting: Compiling reports and integrating data in your freight management process is also another advantage of automating your freight negotiations. GoComet’s software organizes data into informational summaries to monitor how different areas of logistics are performing and helps in making your workforce more efficient.
Implementing GoComet’s platform will help you automate your workflow with ease. Automating your freight negotiations sharply decreases your turn-around time and drives vendors to provide their lowest price, reducing the costs to your logistics department by >15%.
GoComet’s automation gives you the power to increase productivity, work more effectively with your customers and carriers, and reduce your transportation spend to gain a competitive advantage and increased profitability.
Check out GoComet Freight Index – a shipping index reflecting the fluctuation of the spot rates (port pair wise) in international shipping.