Intel Corp.’s Global Logistics Org (GLO) and Corporate Strategic Procurement (CSP) divisions together manage the tech giant’s transportation carrier contracts and rates. 

They found themselves hampered by their carrier rate request process, which required tremendous human involvement, from collecting information needed for a new rate request to uploading data into the external bidding tool. Similarly, once final, contracted rates, across all transportation modes, were cumbersome to gather, process, and upload into systems of record. Another problem was that contracted rates need periodic renewal, and that process was laborious and cumbersome. Finally, the company’s analysis detected non-contracted rate and usage — often much more expensive than contracted rates. 

Missi Anderson, Center of Excellence, sourcing manager at Intel, approached the company’s Supply Chain Innovation Lab for help.

The result was the development of a Rate Request Automation (RRA) program that resulted in a streamlined workflow, along with innovative processes that identify, create and ensure long-term competitively bid and contracted pricing, in order to minimize Intel’s total freight spend. 

The RRA went after several operational improvements.

Firstly, RRA automates the rates bidding process and streamlines its workflow, providing a common interface for rate requests and visibility for commodity managers (CMs) into all active rates. Previously, the bid process was manual. Now, there’s a common semi-automated workflow interface where any CM may accept or reject a bid request, and suppliers use electronic forms & signatures, where new contracted rates become effective and put into service much faster.

Next, RRA increases bidding ease and re-bid frequency. It enables many more, and also more frequent, bids (via multiple suppliers competing) and extending bids of wider services to more carriers, leading to quicker electronic contracts and more refreshing of contracted freight routes and rates. 

Further, the “megabid” cycles previously required months of manual work to prepare data for several concurrent rates to be bid, negotiated, and approved in a large contract. Now, this process is automated using advanced analytics, artificial intelligence (AI) and machine learning (ML). This allows for running the megabid cycles multiple times per year if desired, resulting in fresher and more relevant freight contracting, leading to significant savings for Intel.

Another benefit is in identifying and anticipating non-contracted requests. RRA uses AI/ML and other related analytics to identify non-contracted shipments made by or on Intel’s behalf. RRA identifies and auto-submits non-contracted requests to become new rate requests. While a CM may need to approve these new rate requests, s/he would see this request arrive automatically as a system-initiated rate request.

Lastly, the system offers AI-enabled auditing, using what the company terms “virtual audit agents” (VAA). By connecting the RRA to the VAA capability and other AI-enable spend analysis tools in its portfolio, Intel can better audit carrier compliance, examine actual spend versus contracted spend, and ensure that actual behaviors and outcomes match expectations.

Alankrit Goel, OR engineer, Supply Chain Innovation Lab at Intel, explains that the RRA provides systematic rigor and extended visibility to mitigate and opportunistically drive out excessively expensive ad hoc, expedited and non-contracted spending. 

The RRA process also helps detect patterns from both recent and aggregate shipment histories to convert non-contracted rates into contracted rates. RRA alerts Intel CMs about which rates and routes need more frequent competitive bids. That, in turn, has led to securing better, more-optimal pricing from its pool of contracted logistics providers.

The enhancement to visibility and explainability is also notable, Goel says. RRA provides a common interface for rate requests and commodity manager visibility. CM’s have “control tower”- like visibility of what is being shipped to whom and the ability see what is being optimally shipped (best lanes and prices) and what is not optimal (opportunity for the AI to identify and start the contracting process for price improvement or sending to alternative carrier/lanes).

Intel says that, at the end of the day, the RAA’s capabilities have provided a saving of $20 million on contracted rates, $4 million on non-contracted rates, a greater than 50% reduction in cycle time reduction for complex bids, and a 10X speeding up of negotiating new contract rates. In addition, Intel has reduced its team of CMs from 10 to two, freeing up team-mates to focus on more strategic work.

Anderson says the benefits of the innovation spread far beyond the original scope imagined. “The benefits really spanned across the CMs, our operations stakeholders, and the carriers. They expand beyond our Intel internal ecosystem, because the carriers’ rate cards at the end of a global bid were available sooner… so they could produce cost-competitive bids, so it was a win-win in many ways.”