Stated more simply, transportation spend optimization seeks to ensure that you are spending your money wisely, Haber says. His company "buckets" into three areas as it works with clients. The first is analyzing contract agreements and contracts, making sure pricing and terms and conditions are "fair market value." The second area involves invoice auditing, looking to see that you pay only what you should. The final area is in valued-added processes, which has to do with optimizing modes, network distribution and getting the right mix of product and service usage.
Given that many companies survive today only because they have managed their supply chains well, it's difficult to overstate the importance of optimizing spend in such areas as transportation, says Haber. "You can use it as competitive advantage."
As an example, he points to retail where free shipping is becoming more common. "If you do that, you must optimize your cost structure in order to offer that. You have to keep costs as low as possible so you can roll that out as a marketing tool to help drive sales."
Haber feels companies across the board can benefit from transportation spend optimization. Just how much they can save depends on a number of variables. The range is quite wide, anywhere from five to 50 percent. The lower number may not sound that impressive, but if a company spends $100m on transportation, a savings of $5m is significant, especially when that sum can be plowed back in capital investments, Haber says.
Analysis of agreements is crucial because they are so complex. Often they are filled with "gotchas" that may mean one does not get certain expected services. "Helping them understand those complexities, providing benchmarking and analysis, using data to drive their analytical processes - we provide a lot of visibility to our clients into areas where they are overspending," he says. "And then when we're done, it's like a knowledge dump. They understand things they should look for next time they go through the process."
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Keywords: Transportation Management, Transportation & Distribution, LTL/Truckload Services, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management, Technology, Logistics, Contract Analysis, Invoice Auditing
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