A STRATEGIC IMPERATIVE FOR MANUFACTURERS

Reduce Transportation SpendHow to Optimize and Manage the Integrated Lifecycle of Freight Rates and Service on a Collaborative Platform

Allocating transportation spend in a global supply

chain requires manufacturers to partner with multiple

carriers and logistics providers. Managing these trans-

portation 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 fine-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 efficient. Expenses that could be

eliminated by automation 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

• Difficulty 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 Problem

The core cause of poorly managed transportation

spend lies in manual processes and too much

non-standardized information. 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 constraints of different units of measure-

ment, currencies, and terms. Because of this,

manufacturers must deal with:

• Non-normalized information

• Huge administrative burden

• Difficulty in “closing the loop”

2. Decentralized operations

Large manufacturers often are comprised of various

and competing business units, sometimes grown

through acquisition, 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 transpor-

tation make it difficult to predict outcomes.

This high level of change and volatility means

manufacturers get:

• Unpredictable spend over time

The Challenge

On average, companies spend 5-10% of revenues on logistics-related expenses. Savings are needed, but are sometimes difficult to find.

As demand shifts and fluctuates,

manufacturers should be able to quickly

allocate and reroute goods according

to the latest customer needs.

Companies 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 transportation. 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 standard-

ized 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.

Tune

Compliance/Audit

CarrierResponse

Award Contracts

Counter/Negotiate

Carrier RoutingGuide

Bid Analysis/Optimization

Create/Submit Bid

Service ContractsRates, Service Details,

Carrier Awards, Amendments

Cloud technology captures service contract data in a central

location, letting manufacturers award and adjust contracts

throughout the cycle.

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 Propositions

The value of managing transportation spend on a cloud

platform is huge. Costly manual processes are eliminated

and better decisions can be made. Benefits 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 flow 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 Company

To optimize transportation spend, companies must

transform themselves from silo-based, inward-facing

corporate operators to interconnected, highly agile

business network orchestrators.

NetworkConnectivity

Agility

B

A

Sense more accurately

Operate more e�ciently

Respond faster

Make better decisions

The Solution

Managing transportation spend

shouldn’t be about scrambling to catch

and record information; managers need

to focus on decision-making based on

quality data in the cloud.

GT Nexus provides the cloud-based collaboration platform that leaders in nearly

every sector rely on to automate hundreds of supply chain processes on a global

scale, across entire trade communities.

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