you may also enjoy
Inflation has slowed since reaching a 40-year high in June 2022. The inflation benchmark has been rising for over a year, and those increases are now continuous. However, an analysis by the The Wall Street Journal found that the trend has calmed, and the more current increases are consistent with pre-pandemic growth levels and previous average annual rates.
The Central Bank has taken measures to help ease inflation, including raising interest rates in an effort to calm spending and thus reduce demand and thereby reduce prices. However, despite things looking better in relation to inflation, the transportation industry isn’t out of the woods yet. The effects of inflation are often lingering, resulting in higher operating costs even after inflation has cooled.
We are seeing a continuous downward pattern in the truckload rate per mile index. The projection for the first quarter of 2023 is 11.2 percent, which is an 11.6 percent YoY decline. However, it’s worth noting that the figure it’s compared to from a year ago was a record high. Nonetheless, experts anticipate that 2023 will feature cost increases created by inflation for truckloads, and that high costs of fuel and shipper pricing power will get in the way of profits for truckload carriers.
With this information in mind, shippers are working to gain better visibility over their freight spend through tech-enabled transportation spend management software.
Transportation spend management (TSM) is a process shippers carry out to track the costs of transporting goods from point A to point B — and keep those costs in control. TSM incorporates numerous components, including:
Ultimately, the goal of TSM is to maximize the efficiency of the supply chain while minimizing costs. This helps shippers do more with less.
Innovative software technology and analytics can help identify areas of cost savings and opportunities to improve service levels. It includes useful and relevant features like SKU-level analytics and cloud-based reporting, which make it easier for shippers to stay on top of their transportation spend.
With Intelligent Audit’s software, shippers gain visibility by seeing on-target cost breakdowns in real time. They can automate processes like carrier payments and audits, find faster and streamlined ways to follow carrier terms when paying invoices, uncover invoice problems, analyze carrier performance, and take other steps that are relevant to handling the effects of inflation and best managing transportation spend.
While shippers will have to accept the reality of inflation to some extent, they have tools at their disposal to help them address the effects and adapt as transportation changes. As the impact of inflation lingers into the new year, shippers are revisiting tried-and-true strategies for weathering inflation.
When trying to plan ahead for goals and operations, shippers need to clearly understand the current state of transportation spend management. They need to know how inflation impacts it to have a better idea of controlling risks as much as possible and adapting to what is outside their control. A better picture of the current state also helps shippers determine why there is a need to make changes and how to improve.
This is where improved transparency comes in. Communicating and bringing together data and insights from different teams, systems, and third parties is important.
Transportation management software, integrated into a full-suite transportation management software solution, provides shippers with the end-to-end spend visibility they need to develop the most accurate understanding of their budgeted vs. landed costs. The integration enables shippers to bring together immense amounts of disconnected data and then clean it up and normalize it so it can all be used in conjunction toward better insight and money management.
When paired with historical data accessed via a cloud-based spend management solution, this resource can give shippers a dynamic view of how inflation affects their operations. They can gain actionable analytics insights about avoiding or minimizing inflation in operations.
When considering finances, it’s easy for shippers to become overly focused on the big-picture viewpoint. However, a shipper’s financial standing is composed of many micro decisions. Each of these affects transportation spend, and it’s important to see this happening. Shippers can develop a ground-level understanding of their transportation spend by building spend visibility from SKU-up.
A SKU-level view shows the end-to-end process compared to a detailed, granular spend view or a broader executive overview. It’s helpful to know where each SKU is at all times, including when it’s sitting in a warehouse or on the move. Shippers should also know who is responsible for the SKU during each part of the process. With increased visibility on a SKU level like this, it even becomes possible to adapt to changing demand or other effects of inflation by rerouting or making other adjustments in real time.
Gaining this point of view is one of the ways to better manage inventory. Companies can gain an array of valuable insights from paying attention to inventory. The visibility gained here can help shippers streamline operations and become more proactive about problems. When conditions are uncertain or challenging, like inflation’s effects, shippers can use the increased visibility to create better processes and systems that help them better manage the differences between forecasted demand and future inventory levels.
In the transportation arena, visibility is essential. Transportation spend management software helps shippers keep bills paid on time with the support of optimized payment cycles. This feature ensures that shippers stay aware of all upcoming payments and the best times to pay them. Shippers can use this software to track that invoices are paid according to all contract terms and to gain more visibility through day-to-close specifics. They can see and manage more information, which helps them optimize payment cycles.
Optimized payments through transportation spend management software provides shippers with on-demand access to a complete record of freight payments. Shippers can use this record as a valuable tool when renegotiating their carrier contracts. They have more of a leg to stand on with data-backed proof of patterns and relevant details.
This software and increased visibility into spending can help companies become more flexible about payment options, which can improve relationships and streamline processes with suppliers and carriers. Early payment programs have become popular; they work well because they can make payments more efficient and even provide discounts for paying early. Intelligent Audit’s software offers options for shorter payment cycles and ways for carriers to get paid more efficiently.
The robust reporting capabilities of transportation spend management software offer shippers a holistic view of their transportation spend. Shippers gain the power of SKU-level micro-analytics to create a macro-level picture of transportation spend. Through analytics, they can also notice patterns and problems with carriers, helping them make the best carrier decisions, catch discrepancies, and engage in data-backed negotiating.
Collecting and utilizing data is a crucial way to find insights that help business operations, which is especially helpful during uncertain times. Transportation spend data can be collected and integrated with other data to provide a better picture of the transportation process. When analyzed well, it offers crucial insights into wasted money and ways to save. Analyzing data makes it less about guesswork and more about data-backed patterns and forecasts guiding decisions.
The effects of inflation are creating challenges for shippers. Even as inflation is waning in some respects, it is still creating higher operating costs in the transportation industry this year. Nonetheless, shippers do not need to leave their companies at the mercy of inflation. They have access to tools and technology that can help them rise to the challenge of inflation and make smart decisions that help to counteract its effects.
With Intelligent Audit, shippers can access a robust suite of cloud-based transportation spend management tools. Shippers have at their fingertips access to:
Start a conversation with Intelligent Audit today to adjust to the lingering effects of inflation and come out on top.
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.
