The supply chain business is evolving incredibly rapidly – particularly when it comes to how it uses technology. And with this in mind, earlier this year, we commissioned an in-depth report on how the pandemic impacted the freight procurement industry, by speaking with hundreds of shippers with $100 million-plus in annual freight spend. Almost all respondents, 97% or greater, said they plan to increase their transportation budget, improve freight procurement operations, and make automation and AI a top priority. The results are no surprise, since shippers have been seeking innovative ways to uncover resilience, sustainability, and cost reduction opportunities since the very start of the pandemic.
Fortunately, the supply chain crisis has placed a big spotlight on the inefficiencies found within the “traditional” freight procurement process, also known as transportation procurement. This antiquated, linear process is slow and can last days, which means it can no longer keep up with today’s fast pace and demands. This is precisely why forward-thinking shippers have already turned to technological advancements to automate how they source carriers and move goods from point A to point B. And with margins on the decline, favorable movement in transportation costs can and will positively impact a company’s cost of goods sold (COGS).
Using smart business rules and predictive algorithms, AI-powered technology dynamically sources untapped, compliant, asset-based freight capacity resulting in a much higher probability that the shipper’s goods will arrive on time – and at fair market price. By leveraging AI, a linear freight procurement process becomes dynamic and therefore agile, which helps shippers mitigate rising truckload costs, poor service (OTD), and empty miles. It’s a total no-brainer, yet a large percentage of the $792 billion of U.S. truckload freight is still sourced by decades-old, manual processes such as phone calls, emails, and spreadsheets. Needless to say, the transportation process is riddled with waste and inefficiency, which means there is opportunity for optimization and reduction in COGS.
Like many other important processes within a company, it is only a matter of time until all freight procurement teams are forced to jump onto the digital transformation train. Smart ready-made integrations with important systems, such as a shipper’s transportation management system (TMS), make launching new technology less daunting than it was even a few short years ago. Intelligent freight procurement SaaS solutions can plug directly into a shipper’s TMS and run 100% behind the scenes. The user (a manufacturer, retailer, or distributor) can have complete control on where and when to automatically open untapped, compliant, asset-based freight capacity within their tender process, while AI can go to work to match the best possible carrier.
As actionable data continues to play the leading role in smart decision-making, there is a growing hunger for shippers to gain 100% freight procurement data transparency. Unfortunately, there are still many solutions – and partners – that do not provide a complete 360-degree view of truckload activity. As with any process, making sound, educated decisions on how to continuously improve becomes difficult without all the data. This holds true for a shipper’s carrier network: Without all the data, a shipper does not know which carriers to keep, add, or drop. And as mentioned previously, a fully optimized freight procurement process will uncover resilience, sustainability and cost reduction opportunities, which will better position any shipper to effectively manage unpredictable freight market conditions – especially the volatile conditions we’ve been facing since COVID-19 began. Embracing technology that feeds directly into a shipper’s analytics will be key. As shippers set out to optimize the supply chain in 2022, there’s no doubt the freight procurement process will be at the forefront and scrutinized, especially as truckload costs continue to rise, and environmental, social, and governance (ESG) strategies gain momentum. The quickest way to fully optimize freight procurement will be through AI, automation technology adoption, and 100% truckload data visibility.