Download - Reduce Transportation Spend
© GT Nexus, Inc.
How to Optimize and Manage the Integrated Lifecycle of Freight Rates and Service on a Collaborative Platform
Reduce Transportation Spend
A STRATEGIC IMPERATIVE FOR MANUFACTURERS
Allocating transportation spend in a global supply chain requires manufacturers to partner with multiple carriers and logistics providers. Managing these transportation contracts throughout their lifecycle requires dealing with large amounts of data in many formats.
Transportation needs change so frequently when sourcing is done across continents that a manufacturer cannot achieve the lowest possible spend — while maintaining customer service — without
an automated system. They must have a way to manage the lifecycle of freight rates and service, from the bid process to the fi ne-tuning of allocation plans, in order to avoid additional one-time costs.
Impact of Poor Transportation Spend Management
When manufacturers don’t have the tools to manage the cycle of transportation contracts, the whole process becomes less effi cient. Expenses that could be eliminated by automa-tion end up cutting into the operating margin and adding to the cost of goods sold. When their systems aren’t in the cloud, companies must deal with:
Rates that are not automated
Diffi culty deciding which carriers, rates, and service levels to use
Lack of standardization in use of programs like Excel
Shipments at a more expensive rate than intended
Overspending on additional one-time transportation costs
No analysis of breakdown of charges (duties, broker fees, lane utilization issues)
The Root of the ProblemThe core cause of poorly managed transportation spend lies in manual processes and too much non-standardized informa-tion. This hinders optimal spending and complicates decision making.
1. Incredibly complicated transportation strategy
Global transportation planning involves thousands of lanes in many regions, over varied modes, and all within the con-straints of different units of measurement, currencies, and terms. Because of this, manufacturers must deal with:
Non-normalized information
Huge administrative burden
Diffi culty in “closing the loop”
2. Decentralized operations
Large manufacturers often are comprised of various and competing business units, sometimes grown through acqui-sition, and usually lacking centralized control. This leads to:
Wasted money from different spending strategies in each division
3. Extremely dynamic environment
So many players and factors in organizing transportation make it diffi cult to predict outcomes. This high level of change and volatility means manufacturers get:
Unpredictable spend over time
© GT Nexus, Inc.
On average, companies spend 5-10% of revenues on logistics-related expenses. Savings are needed, but are sometimes diffi cult to fi nd.
The Challenge
As demand shifts and fl uctuates, manufacturers should be able to quickly allocate and reroute goods according to the latest customer needs.
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Plant
Plant
NetworkConnectivity
Agility
Customers
Customer
DC / Warehouse
Plan
Actual At-Risk DelayDynamic ETA
B
A
Sense more accurately
Operate more efficiently
Respond faster
Make better decisions
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The SolutionCompanies that want to successfully manage a closed-loop transportation process across a global supply chain need more than a traditional ERP system to capture and analyze data on rates, carriers, and other partners involved in contracting trans-portation. They need a system that manages transportation spend in the cloud, from creating the bid through compliance and auditing.
In the cloud, bids are run based on data that’s standardized across currencies and rates. Carriers are easily and accurately compared and contracts are awarded based on what-if analysis of different allocation scenarios. Later, managers can compare spend to the original plan and adjust allocation accordingly.
Optimize and manage the integrated lifecycle of freight rates and service on a cloud-based platform.
Use a collaborative, data-driven RFP and allocation engine
Store data on rates centrally for all freight agreements
Close the loop on an integrated freight audit & payment platform
Measure compliance with a series of performance analytics
How to use it for transportation spend management:
1. Automate the buying process and evaluate alternatives
2. Manage complicated contracts over time in a systematic way
3. Audit invoices to avoid over-payment
Value PropositionsThe value of managing transpor-tation spend on a cloud platform is huge. Costly manual pro-cesses are eliminated and better decisions can be made. Benefi ts include:
1. Save at least 3-8% on annual freight spend
Gain optimal service at minimal cost
Consider real-world business rules
2. Save 12-15% on overall freight spend by reducing unplanned buys
3. Streamline bid process and contract management (lowers SG&A)
Access structured bid/response fl ow and automated analysis reports
4. Synchronize segmentation strategies with transport plans
5. Learn from carrier scorecard data to drive improvement
Transportation Spend Management and the Networked CompanyTo optimize transportation spend, companies must transform themselves from silo-based, inward-facing corporate operators to interconnected, highly agile business network orchestrators.
Managing transportation spend shouldn’t be about scrambling to catch and record informa-tion; managers need to focus on decision-making based on quality data in the cloud.
Cloud technology captures service contract data in a central location, letting manufacturers award and adjust contracts throughout the cycle.
Tune
Compliance/Audit
Carrier Response
Award Contracts
Counter/Negotiate
Carrier Routing Guide
Rates, Service Details,Carrier Awards, Amendments
Bid Analysis/Optimization
Service Contracts
Create/Submit Bid
Carrier Awards, Amendments