It has always been essential to have visibility into freight spending. Freight audit & payment (FAP) providers have long paved the way to gaining this visibility by looking at shipping invoices and breaking down freight spend. This standard method has helped countless businesses identify where transportation spend is going and where there is an opportunity to optimize.
That said, companies can now access modern technology, such as machine learning, to improve the processes of gaining visibility and managing transportation.
Machine learning technology takes these goals to a new level to show abnormal spikes quickly and efficiently to identify the cause of price increases. This allows a company to respond to the problem and minimize spending spikes, optimizing the whole transportation management system.
A company's freight spend management or transportation spend management (TSM) refers to tracking and analyzing transportation data to have a continuous understanding of the budget for logistics. Spend management includes keeping track of expenses and finding opportunities to cut costs. It also considers how to streamline operations and improve the customer experience.
It's essential for modern companies to continually focus on TSM as a way to keep up with ongoing changes in the world while maintaining customer satisfaction. Transportation is impacted by many factors, including the cost of gas, carrier fees, and supply chain delays or failures. COVID-19, the war in Ukraine, and inflation provide modern examples of largescale factors outside of a company's control that impact its supply chain and transportation spend.
Shippers should focus on freight spend visibility due to the changeable nature of shipping costs and competition between carriers. In addition, a company must consider whether a carrier can manage all its shipping needs. Therefore, it's essential to balance the costs with the services offered by each carrier when making comparisons.
These are vital areas to focus on when seeking freight spend visibility with a carrier:
In addition, companies should be tracking transportation spend KPIs to see where improvements and streamlining can come into play. These are top KPIs to stay on top of related to freight spend management:
These best practices make visibility easier and more effective:
Shipping technology allows companies to digitize their shipping invoices and related documents. Rather than manually going through filing cabinets to search for information, they can perform a search with the technology to quickly and easily find the needed data. A significant benefit is visibility into errors and problems to get to a place of management by exception, freeing up staff hours for productive tasks.
Automation also makes it easier to take care of data entry, record keeping, and similar back-office tasks. Staff members can save significant amounts of time by using technology for these tasks. This allows staff to utilize their time better and makes all data easily accessible. In addition, companies can use cloud-based tools to communicate and share documents better throughout the organization.
A transportation management system simplifies the process of planning out logistics. It makes it easier for companies to compare the complexities of different carriers and shipment options. Companies can use this technology to determine the best choice in each situation by using data in real time, which generally improves shipping processes and costs.
Teams can ingest, normalize and analyze data during freight invoice audits to develop deeper spend visibility insights. Technology like machine learning allows it to collect and gain meaningful insights from massive shipping data. Through the right technology, you can take advantage of real-time data viewing and reports, giving a clearer picture of transportation spend and how to streamline it.
Transportation spend management (TSM) allows you to plan, use the most effective methods and become a leader in your industry. TSM relies on collecting and analyzing data to find ways to improve logistics performance. Much of the focus is on seeing what is affecting costs and finding ways to manage them while providing a good customer experience.
A freight spend analysis provides a way to see the big picture and look at cost-saving methods that could help in the long run while continuing with short-term ways of trying to save money and maximize processes. This analysis looks at many aspects of freight spend, including performance, asset use, and more. It also pinpoints problematic areas like unexpected fees.
A freight spend analysis should cover procurement costs and utilize technology to collect transportation data. Ideally, a company can obtain real-time data by using RFID tags or Bluetooth sensors.
Then, transportation analytics allows the shipper to sort through the data and make sense of it. Your company can learn more about contracted freight trends, trucking spot freight rates, and other essential data points through analytics.
After that, it's important to create reports that share valuable insights from the data and analyses. The reports should turn the data into understandable and meaningful insights, providing the means for making decisions and streamlining processes. Shippers can then tie the data back into KPIs to understand where your company stands on its goals in various areas and what it needs to do to continue to move toward them. Within this process, it's also helpful to measure your company about industry trends and benchmarks to show your current placement and how to move forward as an industry leader.
Streamlining your TSM offers a company numerous benefits, including:
Your company can create a more optimized logistics network with improved processes and reduced spend. Ways to achieve optimization include:
Your company can provide better customer service by optimizing shipping costs. As a result, you can offer customers the best rates and value through cost-efficient carriers and shipping methods. Providing the best service helps carrier and shipment options adapt to different situations and give customers choices as needed.
Companies can cut down the total cost of transportation by optimizing TSM. You can look at all the components driving transportation costs and various factors that affect them to find the best strategies and reduce costs wherever possible.
Optimizing your transportation management allows you to catch anomalies when they appear. Technology makes it possible to quickly and efficiently find these discrepancies, so your company can devise a solution before the problem escalates. In addition, detecting anomalies often presents ways to reduce costs or prevent unnecessary spending.
Learn more about Intelligent Audit's Machine Learning and Anomaly Detection. Contact us to learn more about our capabilities.
To be fully aware of freight spend, you need to include anomaly detection in your logistics systems. Machine learning technology can go through data and notice anything that falls outside the normal patterns. It finds errors, glitches, fraud, attacks, and other problems impacting transportation spend.
This technology is trained to go through massive amounts of data, allowing it to find anomalies more effectively and faster than people can. As a result, it catches new patterns before they can cause much damage or cost your company a lot of money, minimizing the adverse effects of a problem.
Companies learn about anomalies and why they occurred through machine learning to respond adequately. This gives further visibility that enhances the complete picture of the logistics process. Shippers may also utilize the data to improve transportation management overall.
One of the best ways to fully understand how to apply transportation spend management to your own business is to look at case studies of how it has been implemented within other companies. This not only shows how to do it but also the subsequent benefits.
Toward that end, here are summaries of successful case studies using transportation spend management.
A high-end fashion retailer wanted to improve the management of its expenses. It realized that focusing on transportation was one way to achieve this goal, as transportation costs the company hundreds of millions of dollars each year. In addition, the retailer wanted more information to understand options and present findings to decision-makers.
The retailer did not have visibility or data-driven insights to work with it. So the retailer partnered with Intelligent Audit, which conducted freight audit and recovery services for this brand. IA analyzed the data, listened to the retailer's goals, and developed a solution. As a result, we identified ways the retailer could save up to $50 million in logistics.
A major food retailer ships a high volume of food packages that must arrive promptly. Shipping spend for the e-commerce business adds up to tens of millions of dollars per year. As a result, the company struggled during the holiday season compared to the rest of the year. When shipping costs increased, the company decided it needed increased visibility and data to understand the costs and causes of excess.
Intelligent Audit provided data-driven insights and visibility, which identified the problem of a significant amount of spend on Next Day Air volume shipping. IA helped the company create a fulfillment strategy with third-party locations shippers my use during peak seasons. This solution helped cut excessive Next Day Air service, reducing shipping costs considerably.
A pet supply company handles large volumes of shipping. The shipper decided to change from UPS Ground to UPS SurePost, significantly saving shipping costs while adding a slight delay to the delivery time frame.
After this switch in shipping method, Intelligent Audit's machine learning technology detected an anomaly: a new pattern of shipping correction charges connected to SurePost. As a result, the amount the company paid on shipping correction charges increased about five times after the shipment method changed.
Intelligent Audit's anomaly detector found this problem on its own, which helped create the insight that specific tracking numbers of lightweight shipments were being charged far higher than the previous amount. By zeroing in on the exact cause of the extra costs, Petco could take quick action to address the problem before the cost increases continued. Petco's Manager of E-commerce and Supply Chain noted that the company wouldn't have found this problem independently. Machine learning technology efficiently identified the extra charges and the cause.
Transportation management and freight spend visibility are essential to modern businesses. They ensure a properly functioning transportation system that works well for customers while helping the company keep logistics costs as low as possible. Technology like machine learning and shipping technology provides a much better way to track spending and continually find ways to save. Get a demo of Intelligent Audit's technology for improved visibility today.
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