Why Transportation Spend Management Visibility is Crucial in Today’s Global Supply Chain
Q. Why is transportation spend management so important today?
A. The world is an unpredictable place, and the global supply chain has never been busier. Global trade reached an all-time high in 2021, jumping 23% to $28 trillion, according to the UN Conference on Trade and Development.
Meanwhile, an array of challenges complicate the movement of goods—and impact the costs that go with it. Never has it been more vital to understand where you are spending your transportation dollars. Visibility with summary and line-item detail allocation is critical to understanding where every freight dollar goes.
Q. What does freight spend management encompass?
A, Freight spend management is not just about what the total cost on an invoice is—it’s about the detail. Knowing how much you spend for specific accessorial charges, as well as every type of service, helps identify opportunities for cost reduction. Knowing your lanes, where you are shipping from and to, the specific service requirement, the products, allows you to make informed decisions. Freight spend management is an all-inclusive, deep dive into what goes into the costs of not just moving your products but running your entire supply chain.
It’s easy to lose track of major potential cost savings. Consider this scenario. A location of your business in Poland does not know the United States headquarters has negotiated rates with a transportation provider. In Poland, they use a different provider with higher prices. Without true freight spend and contract/pricing visibility, those unnecessary costs will continue, the spilt milk analogy. With good freight spend visibility, the situation can be identified and corrected. You can “stop spilling the milk.”
Q. What are the benefits of freight spend management?
A. Experience has proven there are opportunities to save money and improve profits no matter how big or small the company.
Imagine a customer spending more than $100 million a year for expedited freight without having any spend visibility. By implementing our freight audit and payment systems, we identified this continued expense and then proposed a solution to validate these shipments before they were made. Our expedited freight approval solution saved them more than $30 million within its first year.
We don’t just capture information at the invoice level—we capture all detailed shipment information on each invoice so the customer has full visibility to their freight spend. If there are discrepancies or issues on an invoice that do not meet the customer’s business rules, we use web portals to interact with either the customer or the transportation provider to highlight those items so they can be fixed, the invoice can be processed, and the provider can be paid on time.
Following the audit, we send the information back to the customer with general ledger codes assigned so that information can be uploaded into their enterprise system, easily allocating costs across their organization and further enhancing the global freight spend management visibility that is critical to streamlining their processes and saving money.