Bottom Line Impact For "Best in Class" Managers

In August 2007, The Aberdeen Research Group released a review on global supply chain visibility trends in 2007. “Best in Class” organizations shipping globally are almost three times as likely as their lower-performing peers to have technologies at hand that give them visibility into supply chain activities. Transportation expense management systems (TEMS) provide an excellent example of the direct linkage between supply chain visibility and bottom line impact. Imagine capturing all the data generated by freight payment processes – every freight rate, every accessorial charge, every fuel surcharge – and then having the ability to analyze these critical expenses quickly and accurately. A TEMS can provide a level of visibility that results in better decisions about both freight purchasing and freight payment processes. Let’s break TEMS into four areas of benefit:

Audit Accuracy / Error Management: By comparing a baseline set of contracted terms against each actual carrier invoice, a TEMS isolates the non-matching invoice items for review. The level of savings here would vary with the number of errors caught and corrected. Current industry estimates place the error rate at up to 3% of a company’s annual transportation expenditure.

Carrier and Distribution Centre Performance Analysis: Most shippers house a mountain of untapped data in file cabinets that could be compiled in a TEMS to evaluate everything from carrier performance to distribution centre compliance. Which carriers regularly charge non-contracted accessorials? Which carriers routinely charge less, or more, to ship to specific destinations? Do regional distribution centres follow direction with regard to using specified carriers? Armed with the answers to these, and literally thousands of other critical questions, a transportation manager can easily shave 3-5% off their annual transportation expense through improved carrier negotiations (based on solid historical data) and strengthened compliance at the DC level.

WMS/TMS Validation: The effectiveness of shipping decisions cannot be measured until the planned, pre-costed movement of goods is compared against the reality of the actual freight invoices received. Here is where TEMS can really shine – by validating, supporting and enhancing the decisions made using an integrated WMS/TMS.

Controlling the Payment Process: Freight payments, whether handled internally or outsourced, remain a sore spot with most expense managers. The sheer magnitude of incoming paperwork can be a daunting prospect to manage properly. However, once the invoices have electronically flowed through a TEMS, control, optimization and regulatory compliance is not only possible but is actually easy. Untapped savings in early bill payments to carriers can be captured while late payment charges on overdue bills are eliminated. Estimates suggest that simply streamlining and monitoring payment processes can capture savings valued at close to 1% ATX per year.

It isn’t all about cost savings - TEMS provides value on the revenue side as well. Here is where a web-based TEMS can provide particular benefit. Imagine a mobile sales force that can access actual, real-time freight costs, on a per shipment, per destination basis, prior to finalizing quotes to potential customers. Arming a sales force with instant access to this information enables them to compete much more effectively against rival quotes, especially in tight bidding situations.