Reduce Operating Expenses With Transportation Spend Management
With the end of the year in sight, many organizations are working tediously to finalize their transportation spend management budget for the upcoming fiscal year. Whether your budget is already set or you are making last-minute adjustments, chances are you will be looking to reduce operating expenses, despite the rising cost of moving goods within the global supply chain.
In many ways, the end of this year is much like those post-COVID, leaving manufacturers, shippers, warehouses, and carriers waiting for the other shoe to drop. It is certainly too early to predict what will happen over the course of the next twelve months, but that doesn’t mean that steps can’t be taken now that can impact your organization’s bottom line come next December.
Reducing operating expenses is pretty simple, get a clear understanding of where you are spending money, and find areas that can be cleaned up. Admittedly, this strategy is incredibly basic, and, more often than not, having a clear view of operating costs within the supply chain can be as clear as mud.
At Trax, we help global organizations implement technology and systems that help streamline how they manage transportation spend management. Through edge computing and artificial intelligence, we are able to help improve visibility and leverage data to drive operational costs down.
New Challenges Require New Strategies
In an ideal world, managing operational expenses would be cut and dried, yet anyone who has worked in the transportation industry can tell you that this is rarely the case. Reducing operational costs requires a very black-and-white approach, even if operating in an industry that is notoriously grey.
For most, operating in the grey is a necessity. They prefer it because decades-old systems and processes remain in place. The simple fact is that the supply chain is rapidly evolving, and new challenges are making it more difficult for those who refuse to adapt. Data is a perfect example of this. Although data is coming in, it may be incomplete, incorrect, or handed off to team members who are relying on a manual process to extract information.
New strategies that revolve around technology are essential to reducing costs, scaling your business, and more. Artificial intelligence (AI) and machine learning are now able to aggregate information in real time with incredible accuracy, making it easier for those operating in multiple markets to manage their business expenses. Tools like freight audit and payment processing are improving visibility into where money goes out the door, making it easier to tighten the process. Over time, technology makes it easier to move out of the grey and clearly understand where reductions can be made.
5 Steps To Reduce Operating Expenses
Look at any industry news site, and you will see that technology is the bell of the ball. It is important to note that technology alone is not a magic bullet. It is not a set-it-and-forget-it process. It’s no secret that ROI can be found quickly, but sustainability requires a clear-cut process.
Step 1: Gain Control
Your supply chain network will naturally expand as your business scales and enters new markets. Understandably, growth is good, but it does come with added challenges. Those with outdated processes will likely be subject to third-party information and data. Although it may seem like the cost of doing business, technology can help you gain control.
One of the biggest benefits of implementing transportation spend management technology is that it provides a single source of information, allowing you to control the information driving business decisions. Rather than bits and pieces, you have all of the information in one location that can help you understand each cost center and areas that can be improved, instilling confidence in your path to reducing operating expenses.
Step 2: Improve Visibility
You can’t improve what you can’t see. Despite the emphasis on modernity, this statement still rings true. Not all organizations have an issue with collecting data and information from 3PLs, warehouses, and carriers within their supply chain network. But collecting information is only half of the battle.
To reduce operational costs, you have to be able to see the entire picture, and third-party data is rarely complete or 100% accurate. Even if the information is reliable, sifting through it manually opens the door to human error or someone on the team simply missing a key component.
Technology can simplify how information is aggregated and interpreted, making it easier to see all of the chess pieces on the board so that you can confidently plan your next move.
Step 3 Streamline Processes
It shouldn’t come as a surprise that transportation spend management technology is designed to streamline how you collect and interpret information. This component, perhaps more than any other on this list, will be specific to each individual organization. Every company has different internal and external processes that they must follow. Technology can be injected into the middle of those processes to remove the burden from each team or department.
The freight audit and payment process is a perfect example. Legions of auditors combing over thousands of invoices each year can be significantly streamlined with the right technology pieces in place. Reductions in overhead, clerical errors, and more all add up to big cost savings that produce ROI.
Step 4: Follow The Data
Once you have control over your information and can clearly see each piece on the board, the next step might be the hardest of all. You have to be willing to set aside subject approaches for one that are based on empirical data. The first two steps in the process will only get you so far if you aren’t willing to follow the information that is being provided.
This is where many supply chain managers who are new to technology struggle. The truth is that data does not and will not operate within the grey, it will show you concrete evidence of where you are spending money and where you are losing money.
It may be that a carrier in your network that has been a partner for years is woefully underperforming. If you are unwilling to take that information to the negotiating table, you will be limited in your ability to reduce costs across the whole organization.
Step 5: Continuously Improve
This final step is incredibly straightforward yet a challenge for many organizations. Like the supply chain itself, improving your approach should never stop. This doesn’t mean that you have to be on the cutting edge of technology adoption, but you need to pay close attention to shifts and changes within the industry and hurdles within your organization.
Data has a shelf life. Monitoring historical trends is helpful, but real-time information can help organizations be more agile, allowing them to pivot when unexpected changes occur within the market.
Reduce Operating Expenses With Trax
The five-step process outlined above is a great starting point, but it is a 50,000-foot view. Getting down in the trenches with the data and information being used to drive business decisions requires time and a clear understanding of how the technology you choose can be leveraged.
At Trax, we work closely with our partners, whether they are just getting started with transportation spend management technology or those who are looking for creative ways to utilize the technology well after implementation. While our technology may evolve and change, our commitment to our partners will always be unwavering.
To learn more about Trax, our technology suite, and how we can help you reduce operational costs, connect with our team.
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.