Visit Our Sponsors
Roughly 75 percent of transportation buyers reported increased spend in 2012, according to the latest American Shipper Transportation Procurement Benchmarking Study, sponsored in part by BravoSolution, spend analysis and collaborative sourcing solutions provider. However, there's a major imbalance in the scope of spending, and the technology needed to properly manage and optimize transportation networks. According to the survey:
• Spreadsheets mask inefficiency: 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 - remain king.
• Long-term profits miss the mark: 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. If technology falls to the bottom of procurement's priority list in the long term, 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 and causing more costly and time-consuming process overhauls over time.
Although the report, available free of charge, reveals 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.
"With volatile fuel costs and carrier rates, procurement needs deeper visibility into transportation spending - and more advanced tools to uncover savings in such a make-or-break category," says Chandler Hall, vice president of collaborative sourcing at BravoSolution. "We're finding that the hesitation around technology involves much more than the initial investment; CPOs need the right resources to ensure stakeholder buy-in."
Approval for a purchasing suite is only the first hurdle for procurement; user adoption is also a major challenge for many organizations. With a new system comes the need to continually educate a procurement team to drive technology ROI. Surprisingly, 79 percent of buyers do not invest in the consultants needed to improve the process.
"It takes more than just a logistics sourcing tool to effectively change the culture and performance of a procurement team that's maintained the status quo for more than a decade," Hall says. "Procurement teams need the right blend of people, process and technology to discover and take advantage of the more complex and hidden opportunities within their transportation networks."
Enjoy curated articles directly to your inbox.