Until operations management and transportation spend are combined, a company doesn't know the true cost of its business, says Jim Barnes, executive vice president of Körber Supply Chain.

You don't really know your order profitability until you know the true cost of your transportation, Barnes says. The key then is to combine your order management with your transportation spend optimization platform. Doing that identifies order profitability. “There's no more guessing game,” he says. “So if you're a merchant or a head of digital commerce, you truly understand the profitability of that order, you really understand gross margin.”

All too often, he says, the emphasis is on getting a product to a customer any place, anytime without thought to the cost of delivery. “But as brands and retailers are focused on margin, this combination of transportation spend management and order management provides them insights in terms of that order profitability.”

Barnes says a hypothetical retailer with 2,400 stores across the country and a two-DC network, one on each coast, must carefully consider more than where and how much to store in inventory. Delivery to stores or e-commerce drops on customers’ doorsteps must be factored into fulfillment costs.

“Tying the transportation spend management from an invoice audit perspective to the original order ID is important,” Barnes says. “By combining those two together, with a primary key being the order and the customer, we know the order profitability at the order shipment level.”

A network is a combination of physical assets, working capital and inventory, Barnes says. A broken network means you've got the wrong product in the wrong location at the wrong time. “The worst thing you can do is make up time through transportation,” he says. Combining order management and transportation spend management gives the granular detail needed to lead to order profitability.