Logistics Sourcing and Collaboration: The Role of Technology

So far in this series on complex sourcing, we’ve looked at the nascent trend toward collaboration in transportation sourcing and how best practices can accelerate success. In this final entry, I’ll address the use of technology in the collaborative process.

Sourcing complex categories is not easy. The volume and sheer variability of the information render common e-sourcing tools or Excel spreadsheets useless for collecting and evaluating logistics proposals. The good news is the basis for getting collaboration working exists today. Modern collaborative sourcing technology already identifies cost reduction opportunities through proper shipper and carrier alignment, using a powerful combination of

1) highly flexible and sophisticated proposal collection platforms
2) powerful scenario analysis capabilities to evaluate a broad spectrum of alternatives and varied proposals

By working effectively with suppliers to drive cost out of the system — rather than fighting over supplier margins — companies ultimately generate incremental and ongoing savings. Technology plays a critical role in helping both parties get to “win” much more quickly and effectively:

Analysis tools level the playing field – and uncover the best options. Once shippers have gathered carriers’ responses, shippers must have a systematic way to balance both cost and non-cost factors. It does no good to ask all the right questions, but then have no way to compare the answers, or if doing so takes months of tedious data manipulation. In a very real way, better analysis tools, particularly those based on optimization technology, allow shippers to ask more meaningful questions, ultimately driving better decision making.

Proposal collection platforms efficiently collect lane-level bids and more strategically accommodate expressive proposals offering alternate services, alternate equipment, bundles of continuous move or round trip business and network balancing solutions. In future innovations, the proposal collection process will focus as much on capacity as it does on price.

Scenario analysis technology thoroughly evaluates all of the expressive proposals simultaneously, while allowing the shipper to introspectively evaluate historical behavior. Next generation what-if or scenario analysis will be used to shape an award profile that best aligns the business being offered to the interests expressed by the carriers, factoring in capacity and non-price criteria at the same time.

These technologies work equally well in markets that favor shippers and ones that favor carriers, as the best solution is always a function of communicating needs and interest for mutual gain. And mutual gain is the reward of true collaboration.

Paul Martyn

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