The first two quarters of 2014 impacted a lot of supply chain budgets. The combination of inclement weather, capacity shortages, and stiff marketplace competition had many companies spending more than budgeted. When budgets are affected, organizations often take it to mean they need to focus on spending less; however, spending less usually only leads to short term success.
Think about the stock market. It has dips and spikes every day. There’s an inherent risk in short term stock market investments. You could win big, but you could lose big just as easily. Because it’s nearly impossible to time the market, someone focused on the short term could sell stock before a huge spike that would have yielded far greater results. Supply chains are no different. Those organizations that look to spend less on their supply chain in today’s market by focusing on transportation rates may miss out on the opportunities that arise tomorrow.
Organizations looking to better manage their supply chain budgets need to focus on the long term value they can achieve by better managing costs along their entire supply chain rather than the short term results they achieve through a “spend less” mentality.
A strategic spend management approach to transportation budgets can help turn your supply chain into the competitive advantage it can be. Find your edge in the marketplace, not by cutting transportation rates, but by spending in the right places you’re in a better position to grow your business and achieve long term success.
Chris O’Brien is Senior Vice President at C.H. Robinson Worldwide, Inc. He joined the company in 1993 and became senior vice president in May 2012. Previous positions with the company include vice president, manager of the Raleigh, North Carolina branch as well as the general manager and later president of the company’s European division.