Strategic freight procurement & the scope of digital integration

Vehicle procurement has evolved dynamically over the years and supply chain experts believe that strategizing the operation is critical to a successful supply chain. The stage typically involves complex operations like reaching out to carrier partners, freight rate negotiations, managing siloed data and budget planning. Manual execution of these processes affects logistics performance with human discrepancies, delays, budget deviations and sub-par decision-making. 

With the rise of digitalization across the logistics industry, manufacturers are investing significantly in building efficiency with digital freight procurement solutions. Automation technology streamlines the processes, providing myriads of value additions like improved carrier-shipper relationships, freight cost reduction, data-driven strategies and competitive advantages. 

What factors influenced this shift from a manual to a digital-driven freight sourcing module?

Primitive vs. Automated freight procurement 

A traditional procurement module comprises a time-intensive workflow relying on human intervention at every step. In the quest for a ‘faster, cheaper and better’ operational model, industry experts believe that digital adoption is what the modern supply chain needs. 

Let’s explore the primary differences between a primitive and digital-driven procurement module:

Differentiator	Primitive	Digital
Reach	Limited reach to a smaller pool of transporters via phone calls, emails, etc. Time-consuming manual follow ups	Freight e-procurement platform to post load requirements with a few clicks Reach multiple transporters, eliminating prolonged manual follow-ups
Freight Bidding	Carrier partners revert to the freighters’ inquiry via traditional modes of communication Time-consuming bidding delays vehicle finalization	Real-time alerts to transporters inviting them to submit their freight quotes Real-time freight bidding bidding resulting in faster vehicle finalization
Freight Negotiations	Time-intensive negotiation process affecting transparency Siloed activities make it difficult to justify rate escalations High freight rates	System automation allocates transparent rankings to transporters as per their freight quotes Transporters can revise their freight quotes, ensuring them an equal winning opportunity & freight cost reduction for shippers Real-time capture of negotiation activities, enabling easy justification of rate escalations
Data analysis	Manual-driven documentation & insights into transporters’ historical data Sub-par data analysis hindering carrier selection strategies	Real-time dashboards with insights into transporters’ historical performance & freight rates Automation-driven analysis ensures strategic decision-making
Visibility	Sub-par visibility into process stages with manual follow-ups Limited operational transparency affect execution & risk management	Real-time insights into each process & negotiation stages Holistic visibility into deviations/ escalations, ensuring strategic execution & control
Collaboration	Coordination gaps with inefficient collaboration model Communication delays increase vehicle finalization time Transporters transfer vehicle/ driver’s details via emails, SMS, etc.	Seamless communication via one-window collaboration platform Real-time communication across all stakeholder units Transporters send vehicle/ driver’s details instantly via Electronic data interchanges (EDIs)
Approvals	Manual approvals from the stakeholder units delays subsequent processes	Real-time approvals across all stakeholder units Automated alerts for pending approvals prevent delays
Freight audit	Sub-par audit cycles affecting overall logistics performance	100% audit compliance enable logistics teams to identify & address prevalent gaps
Transporters’ participation	Minimal transporters’ participation	Increased carrier participation, improving vendor relationships

Decision-making dynamics: Manual vs. e-Procurement

Decision-making is paramount to logistics operations and strategic freight procurement unlocks many growth opportunities for the organization. Traditionally, logistics managers collected transporters’ performance reports and spent hours comparing and determining the most competent one. Manual analysis not only delayed freight finalization but was prone to human errors. Eventually, this resulted in decreased customer satisfaction and inefficient logistics performance in a competitive industry setup. 

A digitalized freight sourcing tool offers functional features to empower organizations with data-driven decisions, strategies and roadmaps. They, in turn, leverage a competitive edge with the following benefits:

The journey of freight procurement: From manual to digital 

Vehicle procurement operations have come a long way and digital implementation played a substantial role in catalyzing efficiency. A well-defined digital freight procurement tool empowers shippers beyond cost-savings by helping them overcome the challenges in a traditional workflow. 

Before digital implementation

Earlier, logistics teams had to undergo tedious administrative and management tasks in silos. Manual documentation and data analysis further added to the complexities, delayed the operational cycles and reduced team productivity. Lack of transparency and visibility into negotiation activities hindered vendor relationships. These challenges affected the logistics budget, agility and performance. 

After digital implementation

In contrast, a digital freight procurement solution automates the workflow from posting load requirements to vehicle finalization, expediting the process stages. It eliminates human intervention and discrepancies, ensuring a seamless workflow. Smarter data-driven decisions improve logistics competency and strengthen control. It unifies stakeholder communication via a one-window collaboration platform, enabling better trust-building. Absolute process visibility and e-negotiations empower the freighters with insights into reasons for escalations, enhancing logistics efficiency and budget adherence.