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Home » Blogs » Think Tank » Smart Sourcing Bots Are Taking On Air Freight Procurement

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Smart Sourcing Bots Are Taking On Air Freight Procurement

air cargo
Photo: Bloomberg
March 11, 2021
Alan Holland, SCB Contributor

The unprecedented scale of disruption caused by the pandemic continues to wreak havoc across global supply chains in the early months of 2021.

With 94% of Fortune 1000 companies experiencing disruption, organizations are digitizing to increase resilience and achieve cost and efficiency objectives, particularly in procurement. One area that’s especially ripe for transformation is in the sourcing of air-freight shipping, for which demand continues to skyrocket as capacity remains scarce. With changes to schedules occurring faster than ever, agility and responsiveness to capacity changes are critical. 

Procurement teams, especially those managing large and complex global supply chains, must adapt and move quickly to secure valuable logistics capacity. By trading in tedious, manual sourcing approaches and replacing them with intelligent and automated processes, businesses can find a new harmony between humans and machines that counters the air-freight challenges that are here to stay.

Stemming from the rapid decline in commercial air travel caused by COVID-19, the strategic sourcing of air cargo has become more difficult than ever. Normally, 80% of transatlantic cargo travels alongside passengers on commercial flights. But while flight numbers decrease, demand for air transport is increasing, as other avenues experience disruption. This perfect storm leaves procurement teams scrambling for options.

To make matters worse, the disruption has caused many airlines to stop honoring contracted rates and move to a spot-bidding model. As new lanes are needed and demands for on-time delivery skyrocket, spot-bidding activities become unexpectedly urgent and remarkably complex. Sourcing multiple quotes from several carriers at scale and in real-time can be overwhelming, especially when procurement teams manage the processes manually. The typical result: slower response times, mistakes, higher rates than necessary. and untracked negotiations and spend.

Sourcing teams must look for a solution that allows for automation and humans to work together in order to minimize risk, maximize opportunities, and strengthen customer-supplier relationships.

Procurement teams are turning to sourcing bots to automate spot-bidding processes that involve inviting the right carriers to compete, collecting and validating bids, messaging status updates, conducting rate card and lane information lookups, and computing award recommendations. All the while, these sourcing bots continue to learn, understand and adapt to real-world changes and evolving needs, giving sourcing leaders the agility they need to carry their organizations forward. When these processes are streamlined, procurement teams are able to save time and collaborate more effectively, resulting in smarter decision making.

Advances in automation technology have allowed for “category-smart” sourcing bots that can identify and understand the specifics of the industries they’re operating in. For example, air freight sourcing bots are designed to navigate the challenges presented in the air cargo market, whereas ocean freight bots are specifically designed for ocean freight bidding activities.

Regardless of industry, intelligent sourcing bots help companies gain a crucial competitive advantage, with increased savings, improved decision quality and a higher level of process compliance. Such benefits can be the difference between sinking and swimming against the competition.

It’s important to note that while artificial intelligence might be able to “take over” the role of a human when it comes to tedious tasks in sourcing, humans bring something to the table that is near impossible to replicate in their technological counterparts.

Bots can’t compete with humans when it comes to empathy, creativity and strategic thinking. With the complexities of today’s supply chain, particularly in the air freight sphere, human connection and intelligence and important when making procurement decisions and establishing partnerships. With A.I. handling the monotonous side of the job, humans can take on the more complex projects and tasks, such as supplier relationship management, risk management and supplier innovation.

A.I. and humans are the perfect match in procurement. Automated sourcing bots can manage the repetitive but intricate tasks of sourcing, leaving procurement teams the time to focus on business operations that are equally as important but uniquely human. The future is humans plus machine, and procurement is the perfect area of business to start.

Alan Holland is founder and CEO of Keelvar.

Logistics Air Cargo Sourcing/Procurement/SRM

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