From fruit to plane tickets, raised costs are around every corner. According to Consumer Reports, even Dollar Tree consumers have seen higher receipts for everyday items after the chain announced its price jump to $1.25 in November of 2021. These price hikes have been expected as diesel prices continue to break freshly set records with skyrocketing prices. The EIA released data on June 13, 2022, that showed a range of regional average prices, from $5.370 on the Gulf Coast to $6.887 in California. With a $5.718 national average, shippers are desperate for ways to offset trucking costs' inflation. Shippers of every size must consider the critical role of logistics cost in this arena by looking out for the following nine reasons that could reveal that their current logistics pricing is not higher than the quality of solutions provided.
When the pandemic hit, shippers and retailers across the nation had to quickly find ways to improve resilience as their companies continued to get hit by massive supply chain disruptions. McKinsey and Company surveyed that, "Only 2% of companies have visibility into their supply chain base beyond the second tier." For example, McKinsey's article explains that sourcing and transporting chip fabrication in the smart appliances market is what visibility in tier 3 would entail. Poor freight visibility amidst chip shortages has devastated multiple industries, particularly in the logistics cost of recovering from such a sudden, massive issue.
Some legacy systems, unfortunately, inherently create organizational data silos or are set up to keep data separate. As stated in TechTarget, "A data silo is a repository of data that are controlled by one department or business unit and isolated from the rest of an organization, much like grass and grain in a farm silo are closed off from outside elements. Siloed data typically is stored in a standalone system and often is incompatible with other data sets. That makes it hard for users in other parts of the organization to access and use the data."
Separate systems and isolated data not only complicate accounting and analytical opportunities but also complicate accurate logistics cost breakdown. While a shipper may find this data option the cheapest option when researching data banks and how much logistics companies charge, these systems charge fees to make changes that require multiple analytical tests over the long term. Shippers streamline their logistic cost usage by standardizing all data within one centralized system while maintaining better visibility for inconsistencies.
Changing carrier standards reinforce the need to properly evaluate transportation costs in logistics, shipping companies need to have a way to visualize expenses appropriately. While some carriers or modes may appear to help shippers save money on freight bill financing on the front end, it's prevalent for bills to have unexplainable logistics charges; meaning it wasn't the most cost-effective option after all. As a result, shipping companies must prioritize acquiring finance and accounting services marked by real-time accuracy. In addition, maintaining a single source for past and present logistics costs is especially essential when multiple team members are responsible for sourcing carriers.
Once a shipping company has begun the process of collecting the data, they discover that the very nature of the supply chain industry insinuates there will be immense loads of data. Whether a company is looking for baseline data or peak season planning, corralling logistics cost data can be an overwhelming experience for shipping companies. In addition, it can be challenging to navigate storage options for the size, whether in the cloud or on external hardware. Shippers benefit from evaluating whether their solution's logistics pricing covers storage options.
Across the board, business intelligence experts would share that one of the best practices to enable cost control is to ensure leveraging all data through actionable analytics. While collecting data is a significant first step, connecting that data is the only way it can drive operational improvements. Because the fast-paced nature of daily operations leaves shipping managers with little time to focus on expense optimization and logistics cost breakdown, having the right analytical tools intact provides an extra set of eyes even on the busiest days. Without analysis capabilities, shipping companies lose out on cost-saving opportunities every day.
During the last two years of high-intensity operations to keep necessities out of back-order status, many supply chain professionals had to learn new skills to put out fires as quickly as possible. Now, 2022 is getting called the "The Great Resignation", for those experiencing burnout in logistics. Instead of shifting office roles or adding jobs to an employee already performing multiple tasks for the company, shipping companies find logistics cost ROI in leveraging an expert such as a freight audit advisor to identify all cost-saving opportunities.
While automation has become the saver of many stuck with mundane paper-pushing tasks, not all robotic process automation solutions are the same. Substandard automation can even be the biggest hindrance to a company's goal of transportation spend optimization by providing decision-makers with a false sense of security that things are moving smoothly. That false sense of security implies that their logistics cost breakdown reports are always accurate without needing a second eye. This can be devastating to a shipping company's profit margins as transportation cost in logistics is the number one business expense. Yet, the easiest to skim through when assumptions drive the train.
As globalization continues to take the supply chain by storm, freight invoice errors are commonplace in the complicated system. Without a plan to check each invoice, shipping companies will struggle under the error weight of missed savings and added unnecessary logistics costs. By utilizing machine learning-enabled technology for exception management, shippers can experience a more efficient, automated management of invoices that make errors the exception instead of the norm. With the right anomaly detection solution, shipping professionals can see their logistics cost data from a bird's eye view without sacrificing real-time visibility of exceptions.
While data is vital, it is only as helpful as it is usable. The adage "Wisdom is knowledge applied" describes this position well, given that finding logistics cost errors is entirely different from understanding the logistics charges meaning and how to remedy them moving forward. It's essential that shipping companies not only look at how much logistics they charge but also at proven case studies demonstrating measurable improvements. All the data in the world is irrelevant without a clear path forward in logistics cost management and the capabilities to head in that direction.
Ultimately many of the nine reasons shipping companies could miss logistics cost-saving opportunities surround one core theme —fragmented data. Whether the data is too much to dig through, siloed, or collected in multiple formats, a lack of data collecting continuity is detrimental to a company's efficiency and bottom line. However, when a shipping company leverages a single source of truth to stream all data through, enormous opportunities arise.
With a deep machine-learning system, shippers have access to a virtual team member running anomaly detection at all hours of the day or night so that human resources can solve problems in real time without sacrificing time manually searching for errors. Actionable insights can guide shippers in evaluating transport methods, such as knowing which loads would benefit from either zone skipping or hub injection. Leveraging a single source of truth for logistics cost data empowers shippers to enter every new carrier contract with the tools they need. Shippers can streamline freight payments with standardized data, making attaining management reports a simple task.
While many logistics solutions are available, Intelligent Audit has been a global leader in finding and solving logistics cost problems for over twenty years. With access to a specialized advisory team, you can get customized guidance on the logistics cost breakdown. This partnership can move your company into smarter, more efficient shipping. Improve your business resiliency and stop logistics cost waste by contacting Intelligent Audit today.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
Supply chain visibility gives shippers a way to respond to rising interest rates. Learn more about the impact of rates on transportation.