Your business depends on relationships with freight carriers to keep your inventory well-stocked and serve your customers. Those freight contracts, however, come with ever-escalating costs.
Controlling the expenses associated with freight should be a high-priority focus area, due to the major role transportation plays in your overall budget. Unfortunately, this process is less straightforward than it first appears. Each freight contract may be opaque and difficult to manage, with rates periodically rising and new charges frequently added.
Despite the challenges, it's still worth controlling the shipping costs associated with freight. This is where the right combination of technology and tactics can deliver savings and stability for your business. By focusing on up-to-date, purpose-built solutions for these issues — and taking a more holistic overall approach to transportation spend management — you can set yourself up for success.
Where Are Your Freight Costs Coming From?
It's easy for freight costs to snowball. Rather than simply paying one clear rate, you're responsible for tracking complex contract language and monitoring performance. Unless you have high-level technological capabilities and freight industry know-how, it's easy to miss some of these expenses.
Issues to keep in mind when grappling with your freight spending include:
- Periodic rate increases: These regular rises in shipping rates are the most overt and predictable sources of added freight expense. Predictability can take some of the sting out of rising shipping costs, but they can still stretch your shipping and freight budget. Over time, years of cumulative increases in rates may take a toll on your bottom line, especially in cases when you don't feel empowered to negotiate aggressively with your carriers.
- New fees and contract language: Standardized rate increases aren't the only changes carriers insert into contracts. Other fees can be harder to detect, especially given the complexity of today's contract agreements. This is one reason why automation and related technologies are so important in transportation spend management — these solutions can help you detect costly issues that might otherwise be hard to parse.
- Poorly negotiated contracts: Negotiation is another area where technology can be extremely useful, as can direct assistance from savvy partner organizations. A freight contract that hasn't been subject to aggressive negotiation could introduce far more costs than one that has received several rounds of revision. Today's freight carrier agreements come with a surprising amount of room to negotiate, provided your company has the bandwidth to exchange bids with partners.
- Missed savings opportunities: In some cases, the problem isn't in the language of the contract, but in the way it's being followed. Due to the sheer number of invoices a modern, digital company accumulates, it's difficult to detect whether you're experiencing issues such as unclaimed refunds for missed service levels or failure to follow the terms of the deal. These types of problems may only be detectable with the right combination of technology and focus.
Once you've taken stock of the possible expenses associated with your freight contracts, it's time to take action and reclaim some of the value given away in these deals. There are several techniques worth trying, each tied to a specific part of transportation management, and each driven by a combination of strategy and tech.
Freight Audit: Find Your Savings Opportunities
One of the first steps to take in limiting your freight shipping expenditures is to audit your carrier invoices. Aided by automation and guided by industry experts, this process goes deep into your organization's carrier invoices.
By examining a trove of information too large for manual analysis, this audit process provides useful insights. You'll know not just what's in your invoices, but what the data means in terms of inaccurately applied rates, double charges, unclaimed refunds or other issues that could become cost centers.
Building a complete picture of your current freight performance from analysis of invoices, real-time shipping data and contracts lets you know where to focus your efforts. By spotting potential reimbursements to claim and incorrect charges to eliminate, you can score quick wins for your transportation budget. This analysis will also help you find deeper issues to correct.
Even if you currently have an auditing service in place, it can pay to test out an alternative provider and potentially find new opportunities. The right solution for you will use high-tech solutions to turn all your freight data into fuel for insights, and will be designed by experts who understand the supply chain.
Keeping up with freight audits can reveal consistent opportunities for improvement. The process also has an equivalent for parcel shipment contracts. Auditing both your freight and parcel shipment contracts as part of unified transportation spend management is an efficient way to protect your bottom line.
Learn the ins and outs of the Freight Audit process.
Optimization: Make Contracts Work for You
Negotiating your contracts allows you to claw back some of the value lost in periodic shipping rate increases. Taking an optimized approach to renegotiation means combining expert insights with tech-driven analysis. By mapping out potential scenarios and analyzing offers in context, you can receive more competitive rates than you may have thought possible.
Due to the steady increases in freight rates and the aggressive changes implemented by carriers, negotiating isn't a luxury, but rather a primary way to keep your overall freight shipping cost reasonable. While it would likely be too labor-intensive and time-consuming to carry out intensive negotiations manually or internally, high-level service offerings take the work off your stakeholders while letting you keep the savings.
The key to these cutting-edge negotiation approaches is automation. By automating every form of analysis, comparison and modeling, it's possible to take a more informed and data-intensive approach to contract optimization levels. When you can see savings potential down to the cent, it's easy to confidently make offers and lower rates.
One important value add that comes with automation is the ability to compare carriers side by side. In a data-rich environment, multi-carrier bid processes would be prohibitively difficult if handled manually. Investigating multiple options, however, is a way to unlock extra value, whether your first instinct is to remain with your current carrier, change providers or sign contracts with multiple organizations.
See how Freight Optimization works for today's carriers.
Freight Services: Drive Efficiencies in the Supply Chain
Managed logistics services, designed by experts and powered by technology, can also apply to other transactions up and down your supply chain. There are numerous areas of freight management where extra automation or hands-on attention from a trusted third-party partner could drastically increase your overall efficiency, further protecting the bottom line.
Potential processes to receive this treatment include:
- Claims Management: Dealing with reimbursements related to lost and damaged shipments can take time and effort. By offloading this process to external experts, you can increase your performance while putting time back into your own employees' schedules. The best claims management solutions will also involve a deep investigation of the root causes behind service failures, helping you prevent issues from recurring.
- Bill Payment: Paying your freight bills effectively means taking a closer look at every invoice to ensure accuracy, while also delivering timely payments and keeping carrier relationships strong. This process, involving data analytics and persistent monitoring, is complex and time-consuming if handled internally. Therefore, it's another area where an expert partner can take over and provide both short- and long-term value.
The general pattern regarding freight processes is that every link in the chain can provide extra logistics cost value if handled in an efficient, optimized manner. It's likely your organization doesn't have the head count to manage each of these efforts — after all, they are complex and data-intensive. This is the value proposition of supply chain expert partners, delivering meticulous logistics service where you need it.
Discover the value of digital Claims Management and Bill Payment.
How a Transportation Spend Management Platform Helps
Considering the digital nature of the modern supply chain, it's only natural that optimal freight shipping services stem from a centralized technology platform. For the best results, you can select a transportation spend management system (TSMS).
Transportation spend management is an approach to supply chain technology that incorporates the traditional functionality of a transportation management system (TMS) but approaches every action through a budgetary lens. Looking so rigorously at transportation logistics costs and savings opportunities helps your organization stay competitive.
One aspect of TSMS to keep in mind is that these platforms combine all modes of transportation across both freight and parcel carrier contracts. Having the whole supply chain organized in one place allows you to take a unified look at your spending and truly optimize your budget from month to month.
A specialized technology platform can access the necessary data to enable auditing and contract negotiations. Having such a centralized hub for organizational information clears up potential confusion and lets you fuel important functions.
Your TSMS can also deliver business intelligence and analytics features. These dashboards, reports, visualizations and widgets help you keep an eye on your business's performance. Whether you're most interested in real-time updates, bird's-eye views of operations or analyses divided by region, carrier or time frame, a modern BI solution has the answers.
See how all these money-saving functions and more are available through the FreightOptics Transportation Spend Management System.
Ready To Reduce Freight Costs?
If you're committed to cutting down your freight expenses and keeping a close watch on your supply chain finances, it's best to start making changes as quickly as possible. In today's highly competitive business climate, these improvements add up.
The ideal way to embrace freight cost is as part of a full-scale transportation spend management deployment. By taking an interconnected approach to freight and parcel spending, you're ensuring your team members put their time and effort to the best possible use, becoming more aware of your entire supply chain.
That approach will come with a new technology platform, transforming all your large and fast-moving data resources into fuel for analytics and optimization. Knowing what's occurring in a modern supply chain at any time is impossible when attempted manually, so automation is key.
While freight shipping cost increases and rising rates are everywhere today, so are opportunities for value. Every contract with wasteful terms can be optimized, and every invoice hiding unclaimed refunds is a candidate for close analysis. By partnering with industry experts and taking a more data-driven approach to the supply chain, you can discover and unlock those hidden savings.
Discover the FreightOptics platform: Request a demo.
