Digital Transformation in Manufacturing Transportation Spend Management

As technology seeps into our daily lives, digital transformation has become a necessity rather than a luxury in manufacturing. The days when digitizing entire operations was considered superfluous and costly are gone, and manufacturers are now finding themselves in a race to adopt the latest technology and solutions.

The pandemic of 2020 harshly highlighted the need for digital transformation, as manufacturers that lacked the adaptability and flexibility to deal with the COVID-19 pandemic strains saw their operations flounder and their market share plummet. The pandemic exposed the tradition of creating entire processes based solely on cost-effectiveness to be brittle and lackluster, faltering at the earliest sign of adversity. Having the lowest price is just one variable among many in the equation of market domination, but enhanced adaptability and agility have proven to be more important when things go awry.

Digital Transformation Benefits in Manufacturing

Digitally transforming manufacturing supply chain processes comes with many benefits, such as enhancing analytics, improving data-driven decisions, gaining greater control over operations, mitigating human error, freeing up human resources, and optimizing overall output.

Removes barriers to dominate new markets

Digital transformation builds a robust operational and financial foundation for manufacturing supply chain processes and allows companies to decimate new market entry barriers. Utilizing reliable, consistent data and technical support, companies can target new markets and onboard new clients without worrying about the complexities of factors like foreign regulation, information gaps, and complex logistic landscapes. 

Brings visibility to Transportation Spend Management

Many companies struggle with Transportation Spend Management, as its complex and intricate nature makes it challenging to master manually. Companies that adopt digital transformation create a funnel of high-quality data that sheds light on their transportation spend, providing them with enhanced and expanded visibility across the globe.

Creates local, regional, and global supplier networks

Digital transformation also provides companies with the necessary insight and tools to shift to suppliers that offer local, regional, and global options. This shift creates a more sustainable ecosystem if things don't go as planned and make it possible to operate even in the most difficult circumstances, such as during the COVID-19 pandemic. Manufacturing leaders report their top objectives in 2021 to include improving operational efficiency (92%), customer growth (87%), integrity (81%), and operational resilience (81%)—all of which involve digital transformation playing a vital role.

Improves data management

By digitizing processes, the collection of data becomes streamlined and instantaneous while analyzing and presenting that data becomes even more refined. Digital transformation makes it possible to integrate multiple platforms, creating a funnel of constant data in real-time. Additionally, digital transformation mitigates human error and allows for faster collection of data, such as inventory, financials, or inbound/outbound shipments. All of this culminates into easy-to-read reporting that allows for quicker, better, and more informed decision-making.

Boosts operational efficiency

Tedious tasks, like admin work, manual processes, and others, are drastically reduced with digital transformation. Digitized processes flow seamlessly without being held back by human errors or the requirement of worker physical presence. The latter was especially beneficial during the 2020 pandemic when manufacturers had decreased worker capacities. Digitized operations are more independent and resilient to outside factors, while less susceptible to human mistakes. Digital transformation shifts processes to be data-driven, increasing overall efficiency and output. 

Trax excels in helping companies achieve seamless digital transportation and automation, eventually optimizing their Transportation Spend Management. By utilizing Trax's solutions and expertise, companies cut down manual labor, gain unhindered visibility into their transportation spend, and become leaders within the market. Trax creates visibility and simplicity where there is complexity.

Manufacturing Case Studies for Digital Automation

Here are some real-life case studies highlighting how digital transformation can take your business to the next step.

Case study #1: Processes alignment with solutions 

A leading US wireless service provider instituted a new vendor compliance process to drive product receipt quality and ensure receipt of all relevant information, such as device activation IDs from suppliers before shipping. The toll of manual labor on the provider's inbound receiving team was high, and the billing process lacked visibility into relevant data, which hindered the digital transformation process.

The company approached Trax to automate the inbound supplier compliance process through a scalable, cross-functional solution, and also requested performance metrics for management and support teams and to increase supplier adoption of the new approach.

Trax implemented an array of improvements:

• Provided a web-based workflow collaboration tool between suppliers, support teams, and management to enhance visibility and control
• Created a role-based portal for real-time data submission, approval, scheduling, and receipt, allowing everyone to know what happened at any given time
• Replaced email and phone communication with system-provided message boards for seamless communication
• Delivered a robust reporting functionality to monitor compliance through real-time and historical trends
• Drove compliance on the procurement side through comprehensive carrier scorecards
• Integrated contract compliance for accelerated and precise payment processing

By creating a centralized hub for data and utilizing our Rate Manager, the company obtained crystalline visibility into their transportation spend, available supplier rates, compliance measures, and more.  

Results

The company reported 15% reduction in transportation spend costs by streamlining communication and replacing tedious manual order processes with real-time interaction, reducing phone calls, voice mails, and emails. 

There was also a 10% improvement in dock scheduling productivity due to accurately matching inbound signals with labor scheduling and a 10% reduction in warehouse detention due to higher visibility on inbound deliveries. 

Additionally, a 2% reduction in inventory carrying cost was realized by virtue of streamlining the order-to-delivery cycle, proving once more that digital transformation checks all the boxes, from increasing flexibility to lowering overall costs.

Case study #2: Elegance lies within simplicity

In another case study, a manufacturer with a complex setup and 11 distinct business units (BUs), all shipping various multi-modal LTL shipments through 25 carriers, needed help with optimizing transportation spend—especially minimizing the number of carrier contracts and the complexities involved.

The manufacturer approached Trax with a set of goals in mind:

• Achieve substantial transportation cost savings and mitigate rate increases that slice into transportation budgets
• Centralize and scale enterprise spend through data-driven decisions and input from the BUs
• Utilize Transportation Spend Management for its LTL shipments to drive routing compliance
• Achieve customized, long-term agreements to streamline shipping and increase capacity
• Build resolute partnerships with carriers and create an environment of continuous improvement

Trax established end-to-end optimization of the RFP and contract management processes as the solution. Already as the client’s freight audit partner, Trax conducted a pre-RFP analysis that allowed us to solicit competitive bids for LTL shipments, create RFPs, and handle negotiations. 

Results

Contract and RFP optimization led to a whopping 12% in savings, higher than the 10% originally anticipated. This was mirrored in a 12% decrease in overall annual spend. The overall number of shippers was greatly reduced, and Trax created reports highlighting any gaps in optimal shipping or opportunities to increase savings. 

By digitally transforming the contract and RFP process, as well as the M&E procedure, an aura of data-driven continuous improvement envelopes the manufacturer’s operations. The newfound enterprise compliance to a specific standard and methodology means opportunities for more savings are now systematically taken advantage of and the quality of operations is perpetually on the rise. 

These case studies highlight the critical importance of ways that digital transformation leads to significant cost reductions across your Transportation Spend Management strategy. 

Trax Makes It Simple

Digital transformation may seem daunting at first, but at Trax, our experts make it elegantly simple. And our track record shows how our white-glove, seasoned approach brings fast results. 

In a time where the agility, flexibility, and adaptability of a supply chain is much more important than cutting costs at every opportunity you can rely on Trax to guide you through the digital transformation of your Transportation Spend Management strategy. Contact us today!