The Unintended Consequences of Inconsistent Freight Procurement

When you think of supply chain management, capabilities such as agility, responsiveness, and flexibility often come to mind. But an important capability you might not think of very often is consistency, which is defined as: “conformity in the application of something, typically that which is necessary for the sake of logic, accuracy, or fairness.” Why is consistency important, especially when it comes to freight procurement? What are some of the unintended consequences of inconsistency? How can technology help companies manage their transportation data and spend in a consistent way? Those are some of the key questions I discussed with Dave Maddox, VP of Enterprise Sales at Emerge, in a recent episode of Talking Logistics

Agility and Consistency

We hear so much about the need for agility in reacting to today’s ever-changing marketplace. But we also want consistency to avoid chaos and confusion. At face value, these two capabilities may appear to be in conflict. Are they?

To Dave, agility is all about having the necessary data to understand the market changes and the technology to use that data to react quickly and effectively. The consistency comes from the structure that the technology provides to help companies to acquire, process and execute upon the data in order to deal with change quickly and profitably across the business.

Dave explains how this pertains to freight procurement in terms of recognizing changes in the transportation market, such as the recently falling rates in the spot market, and being able to go out quickly for mini-bids or short-term bids to take advantage of the savings. Companies can also use a freight benchmarking tool to analyze their lanes against the market to see where opportunities may exist.

The Consequences of Inconsistency

Not being consistent can have unintended consequences. For example, Dave mentions that they still see many companies using spreadsheets and emails to manage freight procurement, which requires a lot of effort and time and often produces less than optimal results. Because of this approach, people say they don’t have the resources to go out for shorter term bids. So, they rely on a small group of carriers, often at higher than current market rates, without ever knowing if better opportunities exist out there.

Dave says, “What they need is nimble software that allows them to easily get a bid out there, get the information back, and be able to quickly run scenarios and constraints to find better options. In contrast, doing big annual bids with multiple rounds and spreadsheets takes too long and misses opportunities that more frequent bids uncover. And it ties up staff for many weeks which may cost more than any savings from the bid. And there are also data accuracy issues due to human errors. That’s where the inconsistency comes in.

“Using the software also enables access to a much larger group of vetted carriers with the ability to rapidly evaluate the results,” adds Dave. 

Technology and Consistency

Besides the speed, accuracy and savings technology affords in the freight procurement process, there is the issue of consistency across business units. Many times, companies with multiple divisions run in silos and may not know what other divisions are doing and do not leverage their total freight spend with carriers. There are also missed opportunities for more optimized moves.

“For example, you may have a truck coming out of one facility that could be combined with freight from another facility to create a multi-stop truckload,” says Dave. “Again, it’s about the data. We use AI and machine learning to analyze the data and look for optimization opportunities.”

Dave also highlighted the importance of having a transportation management system (TMS), which enables companies to streamline and automate their execution and track and trace processes. A TMS, coupled with a routing guide, also provides a “single source of truth” that creates consistency across the business. 

How to Develop Agility and Consistency

With the clear benefits of using technology to be both agile and consistent, I asked Dave how companies should get started with this journey. What questions should they ask? Dave provided some great insights and advice, so I recommend you watch the full episode for all the details. Then keep the conversation going by posting a comment and sharing your own perspective on this topic.