In a survey we conducted in October 2020, 91% of our Indago supply chain research community members, who are all supply chain executives from manufacturing, retail, and distribution companies, either “Agreed” or “Strongly Agreed” that the time had come to transform the traditional transportation procurement process. Yet, we all know that waste and inefficiencies still exist. Has the time finally arrived to reimagine and transform transportation procurement? What factors are driving this trend today? How can technology help make transportation procurement more efficient, effective, and automated? Those are some of the key questions I discussed with Ran Sun and Chris Chmielewski, who are both Senior Product Managers at Uber Freight, on a recent episode of Talking Logistics.
Why Change?
We are all resistant to change to some degree, so why change transportation procurement practices? Chris explains that in today’s rapidly changing market, routing guides can quickly deteriorate leading to excessive costs and service issues. Part of the problem has been that companies have been managing transportation procurement with manual processes (i.e., email and spreadsheets), which makes it difficult to adapt to market changes, as he shares in this short clip:
“Without using technology, it makes it really challenging to go back and look at all your data in one central place,” says Chris. “It makes it difficult to assess historical trends and make more informed decisions.”
The Imperative for Change Today
The transportation market is certainly different today than four years ago, especially during the peak of the Covid pandemic. Ran points out that although carrier rates have been lower over the past 12-18 months and carrier performance has been generally good, sophisticated shippers remember the chaos caused by the pandemic and want to be better prepared for future challenges. As part of this they are looking for automated solutions for procurement.
“Beyond better rates, shippers want a holistic view of how their contract and spot procurement channels interact and be nimble enough to switch between the two when it becomes advantageous to do so,” Ran says.
Chris adds that procurement is no longer a once-a-year event. It’s a continuous business process. “Using emails and spreadsheets to do this is too slow and cumbersome,” he says. “Shippers are looking for automation to simplify and speed up this process. Technology enables companies to quickly consolidate data in one source so they can use it to make well-informed decisions across many areas.”
A Technology-Based Approach
Just like the New York Stock Exchange brings buyers and sellers together in a neutral environment, with increased transparency and increased efficiency in execution transactions, there are three components necessary for an effective procurement solution, as Ran explains in this short clip:
Defining the Benefits
Chris says customers are able to run procurement bids smarter, faster, and with less effort. This allows them to see changes in the marketplace in real time and quickly act on those to course-correct sooner to increase efficiency. This drives cost savings and improved customer service.
Ran adds that in the spot market they are able to show carriers load data such as pallet count, whether it is hazmat materials or if it needs refrigeration so the carriers can give shippers more accurate bids. Carriers can also submit bid changes electronically. Shippers can also compare bids to contract rates to make informed decisions. All this leads to reductions in labor requirements and cost savings.
Getting Started
Change is always difficult for companies, even if they know they need to do it. When it comes to enabling a smarter and more automated transportation procurement process, what’s the first step to getting started? How can companies overcome “the resistance to change” hurdle? Ran and Chris offered some great advice on those questions and more, so I encourage you to watch the full episode for all their insights. Then keep the conversation going with your questions and comments.
