Imbalanced Investments: Transportation Spending vs. Procurement Technology (Part 1)

‘Keep on trucking’ has a new meaning.

According to the latest American Shipper benchmark survey, transportation spending increased in 2012 – according to 75 percent of respondents – remaining unscathed by budget cuts.

Shockingly, though, companies are failing to invest in the necessary procurement tools to manage spend and optimize their transportation networks. Here’s the cliff-note version of the results; the full report is worth a thorough read:

  • Transportation planning is sorely inefficient: According to the survey, only 25 percent of buyers are using a completely systems-based approach for procurement. For over 40 percent of respondents, spreadsheets – and the sourcing inefficiencies and missed opportunities for volume-based purchasing and transportation optimization that come along with them – remain the process of choice. 
  • Long-term planning falls by the wayside: Nearly two-thirds of respondents have no plans to automate transportation procurement, and only 12 percent indicate that automation is in their company’s five-year plan. Without a way to optimize and automate logistics, a company’s hard-earned cash won’t go nearly as far.  Over time, missed savings are multiplied, and company profitability suffers. 
  • Complacency halts resource optimization: More than half of 3PLs are satisfied with their current procurement process, and may be missing out on easy improvements to their networks.

Managing a global logistic network is one of the toughest tasks in the supply chain. Volatile fuel costs, carrier rates and shipping restrictions make it harder than ever before, and demand deeper visibility into spending from companies.

In my next post, I’ll hit on the top strategies to improve the procurement process and uncover hidden savings in your logistics network.

Paul Martyn

Paul Martyn is VP of Supply Strategy at spend analysis and contract management company BravoSolution.

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