Supply Chain Solutions and Transportation Spend Management
Reducing costs, time, and waste throughout the production cycle is a core driver of success for supply chain leaders. When it comes to improving efficiency, having a clear supply chain management system in place is critical.
Which supply chain solutions add the most value to a business? The answer relies on leaders understanding the variety of supply chain solutions available today. We’re covering key aspects of supply chain management and how transportation spend management software fits into the mix.
Trax offers enterprises the opportunity to become more strategic in their supply chain operations. Leaders discover the power of the Trax transportation spend management software by moving from a reactive to a proactive state, ultimately achieving transportation management maturity.
Determining the Current Market State
In a nutshell, supply chain management is “the handling of the entire production flow of a good or service.” Because this includes everything from raw materials to delivering a final product to the customer, there are multiple components that rely on each other. CIO identifies five core elements of supply chain management:
- Plan - Demand changes impact the resources needed for a company’s product or service. Therefore, planning for demand variation by incorporating advanced analytical tools is key to yielding reliable forecasts.
- Source - Finding the right vendors for raw materials involves balancing budgeting needs as well as timing. It is crucial to maintain positive supplier relationships by creating processes to monitor orders, inventory, and payments.
- Manufacture - When it comes to the production of the final deliverable, companies must go through the process of assembling, testing, and packing products. Additionally, the operations should be optimized based on a feedback system.
- Deliver - When working toward transportation spend management maturity, this stage should be at the forefront. This is a major step for logistics solutions that deal with scheduling deliveries, dispatching loads, invoicing customers, and collecting payments.
- Return - If a product is defective or it doesn’t meet a customer’s expectations, a company should have a process in place for taking returns and making exchanges. This is sometimes known as “reverse logistics”.
Supply Chain Models
There is no one size fits all solution to supply chain management. Rather, companies adopt different supply chain models which play a role in how each of the areas above are addressed.
According to the Institute for Defense and Business, there are six types of supply chain models:
A continuous model exists in markets with supply and demand stability, meaning that there is little variation in the rate at which products and services are delivered. On the contrary, the fast model is applicable when a business changes its line of products regularly, which are driven by trends.
The efficient model is used when the market is very competitive. Companies need to focus on efficiency to maintain their competitive advantage. IDB states that the agile model is based on “virtual integration, process alignment, a network base, and market sensitivity.”
The custom-configured model deals with products that can be customized by consumers. There are multiple product configurations in place for this model. Finally, the flexible model is characterized by the ability to meet both high and low demand depending on the season. This requires part segmentation, accurate stocking algorithms, and flexible planning.
Identifying Supply Chain Solutions
Depending on the supply chain model for a company, there are different solutions to target the core elements of SCM.
When addressing manufacturing, a company might be focused on sustainability. These solutions can include anything from carbon emission trackers to automated systems that can fill labor gaps. The most impactable area of SCM to address is the delivery stage, which is where transportation spend management solutions come into play.
Specifically, when focusing on transportation spend management, the 4PL model proves to be effective and research shows that 4PL operators are becoming increasingly prominent in the global logistics market.
Therefore, finding a logistics partner is a good first step to establishing the company’s goals and strategy for supply chain management.
The right TSM solution should address multiple areas of the supply chain, from simplifying FAP to automating payments. Additional features include cleaning and normalizing data, managing rates and contracts across the business, gaining visibility into all areas affecting transportation management, and improving partner relationships.
Finding the Right Transportation Spend Management Solution
When choosing a 4PL to work with, companies need to know what makes a reliable TSM solution. Consider the following checklist:
- Addresses multiple modes of transportation
- It is backed by global resources
- Provides thought leadership
- Delivers innovative products
- Has a proven track record of success with customers
If a logistics company checks all of the boxes above, it is a good opportunity to reach out about forming a partnership. However, if a prospective 4PL is missing any of the key requirements above, it’s important to note the shortcomings and critically assess whether the solution can meet a company’s needs.
Trax Supply Chain Solutions
Supply chain management encompasses planning, sourcing, manufacturing, delivering, and returning products and services. In order to manage all of these areas, many enterprises seek the expertise of a 4PL. Supply chain solutions can address any and all of the five core elements discussed, but one area that proves to be effective is transportation spend management.
The Trax TSM solution offers companies the opportunity to implement more sophisticated technology that can address multiple areas of supply chain management with proven results.
Contact Trax today to gain a logistics partner that can provide the supply chain solutions needed to remain competitive in today’s market.
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.