Four Strategies to Optimize Logistics Spending (Part 2)

In my last post, I shared some surprising stats about the lack of a systems-based approach for logistics procurement. Here are four critical steps for improving the process, optimizing resources and uncovering savings:

  1. Ride the automation wave. Although the American Shipper survey revealed that most buyers are satisfied with the status quo, large shippers are hungry for the benefits of a more automated approach. More than 80 percent believe that procurement technology streamlines data management and improves the efficiency of managing complex sourcing, and 68 percent understand the impact that procurement technology has on the bottom line.
  2. Redefine ‘relevant data.’ Traditional  procurement data kept in those spreadsheets can include: AP/GL data, purchase order data, P-Card data, invoice data and contract information. However, this creates a narrow view of the logistics category. By expanding this data set to include transactional and survey-based supplier performance data, procurement plans and forecasts, savings initiatives, and commodity tracking details, procurement can make smarter buying decisions.
  3. Strive for spending transparency. You’ve completed the two biggest hurdles for robust spend analysis: cleaning and importing all spend data, and supplementing it with critical supplier and market data.  Make the next jump by launching a complete spend analysis program to uncover opportunities for volume-based purchasing, contract negotiation and compliance. When making this critical investment, keep in mind that your needs will grow, and the technology you choose must be powerful-enough to meet those needs today – and scale for the future.
  4. Create a training and skills assessment plan. The hesitation around technology involves much more than the initial investment; CPOs need the right resources to ensure user buy-in. Surprisingly, 79 percent of buyers do not invest in the consultants needed to improve the process. Ensure that any partner you work with can provide the needed skills assessment and continuous training for driving technology ROI.

Do you still depend on spreadsheets or have you made the investment in procurement technology? Are you somewhere in the middle? I’d love to hear if you made the transition – and share any lessons learned.

Paul Martyn is VP of Supply Strategy at strategic sourcing company BravoSolution.

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