7 Challenges in Transportation Spend Management for Tech Companies
With technology evolving at a faster pace than ever, the global demand for tech supply chain management is skyrocketing—and so are the challenges. To make matters worse, during 2020, electronics manufacturers had the additional challenges of needing to rely on third- and fourth-tier suppliers, a reduced workforce, and more. Your tech supply chain management needs a Transportation Spend Management strategy that establishes a strong foundation of best-in-class global freight audit and builds upon that with carrier performance and rate management and data compliance. This wholistic strategy delivers greater global visibility, resiliency, and control.
At Trax, we’re here to help you overcome not just everyday obstacles, but even ones encountered during unprecedented times so you can remain competitive and lead the industry.
1. Short Product Life Cycles
A major challenge in tech is short product life cycles, as risk drastically increases with such a fast pace. Tech companies are increasing the frequency of their transportation forecasting from annual to quarterly due to the dramatic overages in 2020, which was coupled with strained supply. For example, during 2020, worldwide PC shipments went up 4.8% for the year and 10.7% in the final quarter. Such demand increases in shipping made accrual management even more of a tedious, error-prone task that burned through resources, and companies had to revamp the process to handle the higher number of outbound shipments.
Another problem with shorter life cycles is carrying more inventory to meet growing demand, especially when that demand is shifting from in-store to online shopping and consumers expect fast shipping. Overstocking inventory in the tech industry is a double-edged sword, as it runs the risk of a certain part or product becoming obsolete. Shorter product life cycles, growing demand for online purchases, and faster shipping times require better inventory management.
The solution to this problem lies in enhancing end-to-end visibility throughout your Transportation Spend Management, along with centralizing and standardizing high-quality data for better forecasting and budgeting. Gaining better insights and relevant information means you can make quick and accurate decisions to be in the ‘sweet spot’ so you have optimal inventory to meet demand without locking up funds and missing opportunities due to overstocking.
Normalizing and optimizing your data management and boosting visibility is just the start of Trax’s Transportation Spend Management Maturity Model, a framework that provides a roadmap for large, global enterprises to shift from a lack of visibility and control to a fully optimized and accurate data-based transportation supply chain—for all modes and geographies. By maturing through the Proactive, Optimized, and Leading tiers of the model and leveraging tools like our Accrual Manager and Budget Manager, you gain unhindered visibility and unwavering control you need to perfectly manage your supply chain within shorter product life cycles.
Shipping across global markets is tough—your shipment has to arrive on-time, without incident, and within budget. You have to deal with multi-modal shipments, complex shipping lanes, and various regional regulations and tariffs. Delayed shipments due to errors not only incur unwarranted costs, but they may result in products reaching the market too late and becoming a burden on the company, as they may become outdated or miss certain launch dates for new products, giving the competition an edge. When dealing with foreign markets, seemingly simple tasks like choosing a carrier become more difficult. Freight audit and payment become extremely sensitive, as a mistake could hold up your shipments at port in a foreign country until the issue is resolved.
You can optimize your worldwide logistical network and dominate the global stage through outsourcing your Transportation Spend Management to Trax—we help you manage and optimize your transportation operations to maximize your efficiency and cost reductions. For example, our freight audit and payment services, premium carrier management service, and TraxPays service, which lets Trax pay carriers on your behalf. You can ship to any location through any mode without having to worry about the intricacies involved when it comes to your transportation spend.
If 2020 highlighted one thing in supply chain management, it’s that agile and resilient businesses are the ones to thrive in a volatile market. The tech industry needs dynamic supply chains that allow it to adapt to sudden market shifts and new technological products and overcome disruptions. More than 70% of supply chain executives say their supply chains are facing major disruptions more frequently, such as tariff disputes, natural disasters, and border closures. Agile supply chains weather the storms and turn these worst-case scenarios into opportunities to gain market share.
Trax’s Transportation Spend Management Maturity Model helps you achieve this. As you go through the three tiers, your supply chain transforms to be more resilient and nimble so you can shift gears in an instant and make impactful, snap decisions. Optimizing your freight audit process is a great stepping stone toward collecting high-quality data and being able to ship anywhere across the globe fearlessly. Our Rate Manager also centralizes global rates, both contractual and spot quotes, to help you gain more visibility into cost-effective options. Normalizing and gathering reliable, real-time data shifts your business to be more Proactive, the first tier of the maturity model, and you can better plan, forecast, and anticipate—even avoid—issues that may arise.
Once you mature to the Optimizing tier, you can anticipate issues and expertly handle them, ensuring you don’t waste money or time repeatedly fixing problems—you can identify and correct the root of it. Previously unforeseen obstacles now become easy to avoid or work through, giving your supply chain flexibility and resilience. Our Claims Manager, for example, streamlines the claims management process and makes it easier and quicker to file and close claims. Using it in tandem with our Accrual Manager, which makes the process of accruing smooth, simple, accurate, and consistent, you gain full financial optimization to seamlessly deal with any issues that arise.
In the Leading tier of our maturity model, you’ve optimized your Transportation Spend Management and can drive change and innovation in the market. You don’t just react to or anticipate issues, you use them to your advantage. You leverage tools, such as our Carrier Management services to ensure your logistical network is optimized and your carriers are providing you with the quality that you need. Pairing it with our RFx Manager enables you to get quotes and proposals customized to your needs in record times. This way you can take advantage of dire situations when the competition is faltering and widen the gap between you and them by dominating the tech transportation landscape. Where there’s an opportunity, you’re the first responder—that is, if you didn’t create it yourself.
4. On-time Deliveries
The complexity of tech supply chains partly comes from the number of players involved. Suppliers, manufacturers, distributors, shippers, and retailers all have to work in tandem to meet fluctuating market demand, the constant evolution of products, and increasing customer expectations.
Some tech companies have revamped their supply chains to adapt to the changing landscape, for example, using local stores to ship to clients and offering 48-hour delivery times. Not only does this maintain existing consumers, but it onboards new ones whose former suppliers couldn’t meet customer delivery times or expectations.
To maintain a constant stream of timely deliveries, you need real-time data management. It’s expected that 50% of global product-centric enterprises will invest in real-time transportation visibility solutions by 2025, a recognition of the importance of real-time freight data and analytics, something our Data Compliance Service is designed to do. You can achieve that visibility through outsourcing Transportation Spend Management to Trax and using performance and product-related tools such as our Performance Manager and Match Manager, as it will provide you with a constant influx of data, including carrier performance, compliance, capabilities, and capacity. You can then make informed and data-driven decisions that ensure your clients get their shipments on time, all the time.
taking advantage of it. When a decision involves multiple parties, it’s usually a long process and department heads look at their main objective rather than the collective one. Striking a balance can be time-consuming.
Take a shift from store purchases to e-commerce as a great example. Such a decision includes executives from various departments all chiming in with their own goals and data from their own departments. When end-to-end data visibility takes center stage, however, you have a quantifiable fountain of information that drives the decision-making process to benefit all parties involved and meet the overall corporate vision.
You need centralized, normalized, and optimized data for your Transportation Spend Management. Trax can help you streamline your decision-making and shift your business from being reactive to proactive. You gain end-to-end visibility of your Transportation Spend Management to make data-driven, informed, and impactful decisions.
6. Mergers and Acquisitions
One of the most difficult aspects of mergers and acquisitions is consolidating data from disparate ERPs and discrete systems to accurately gain a holistic view of operations and plan, forecast, and budget. Centralizing your data allows you to set comprehensive metrics and analytics that suit the entirety of your post-merger operations.
Transportation Spend Management feeds clean, real-time data back through your systems into one centralized hub of information so you can avoid redundancies and data silos, as well as be able to create comprehensive analytic reports. You can also align your transportation spend performance with your business unit budget, ensuring your supply chain stays within the set financial parameters and continues to meet corporate objectives.
7. Price Pressures
Tech gets cheaper quickly. The constant introduction of new tech, globalization of the tech world, and increased competition mean operating margins shrink rapidly. This makes increasing cost reductions one of the most important parts of high-tech supply chain management, especially for those that use increasingly expensive raw materials like minerals and metals.
Damages and losses play a gargantuan part, as well. Not only are they costly, but due to the time-sensitive nature of tech shipping, they may result in losses larger than just the products. Ensuring you have a strong claims management process is key to eliminating losses, and you can do this by using our Claims Manager.
As you mature through the Trax Transportation Spend Management Maturity Model, you can fully optimize your operation to minimize waste and unwarranted costs. Using our Rate Manager in tandem with our RFx Manager allows you to always onboard carriers that meet cost requirements while our Carrier Management Services and Performance Manager ensure your performance standard and consistently deliver value to clients.
Get Started with Transportation Spend Management
The fast pace of tech supply chain management is intricate and time-sensitive, given the exhaustive consumer expectations, global shipping complexity, dwindling price margins, and more. Unless, of course, you optimize your Transportation Spend Management to gain unhindered visibility and full optimization of your operational and financial processes within your supply chain. To learn more about how we can help you take your supply chain to the next level, contact Trax today.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.