Transportation Spend Management Software: Features and Capabilities
Having the right tech stack equipped is key for transportation spend management. The simplest way to ensure that a company’s TSM system has all the capabilities needed to accomplish the business goal is to work with a logistics partner. However, this involves comparing logistics companies and their software to determine the best fit.
Read on to discover the features and capabilities of transportation spend management software that prove most beneficial in today’s market.
Trax offers a complete transportation spend management solution that empowers businesses to improve supply chain efficiency. By leveraging the Trax TSM software, companies experience higher savings, greater visibility, and better control.
Data Extraction and Organization
One of the first steps in utilizing any software is extracting and organizing the data. Therefore, the right transportation spend management software should provide sophisticated freight data management capabilities.
In our Guide to Supply Chain Analytics, we covered the various data points to analyze with a comprehensive TSM system:
- Vendor data
- Internal operational data
- Project costs and performance
- Team costs performance
- Vehicle or asset costs and performance
- Invoicing & financial information
- Timeline data
- Scenario planning
While the specific data sources will vary depending on a company’s priorities, this list is a good start to understanding the importance of having access to dynamic, centralized supply chain information.
Once a centralized data hub is established, finding a freight audit solution to leverage the freight invoice data is a logical next step. By standardizing the freight auditing process, companies reduce errors, improve accuracy, and streamline operations.
There are five steps to a standard freight invoice audit which are covered by a modern FAP system:
- Data integration
- Data management
- Digital Auditing
- Allocating costs and sending payments
- Analyzing and reporting on relevant data
The positive outcomes resulting from implementing a reliable freight audit and payment system include compliance, governance, and efficiency. In addition, the Trax freight auditing system stands out from its competitors by offering supply chain leaders the opportunity to become more proactive and optimize processes as the company matures.
In addition to freight invoice auditing, a company's right freight audit system may be equipped to handle other necessary audits. For example, logistics audits aim to measure a company’s performance in all logistics operations and can be addressed with a transportation management software that captures data related to staff and productivity, inventory management, warehouse planning, layout, and operational efficiency.
Leveraging a rate management solution as part of a comprehensive TSM software addresses issues related to the disjointed life cycles of rate procurement, freight audit, rate maintenance, and spot quote management.
Specifically, the Trax Rate Manager enables supply chain leaders to manage all carrier rates from a centralized system. This improves supply chain visibility, operational efficiency, and validation processes.
Transportation Spend and Cost to Serve (CtS)
Transportation costs generally fall under one of three categories: terminal, line haul, and capital. Terminal costs are directly related to loading, transshipment, and unloading, whereas line-haul costs are a function of the distance traveled. Capital costs include the costs associated with a company’s physical assets, like terminals, vehicles, and infrastructure.
Managing all of these aspects of transportation spend impacts the cost-to-serve, a key metric to consider as a business works towards transportation spend management maturity. At its core, cost-to-serve represents the profitability of a customer account, as it is calculated by summing the costs of actual business activities and overhead costs incurred in service. While the gross margin is calculated by subtracting the Cost of Goods Sold (COGS) from the net sales, the net profitability is further calculated by subtracting the CtS from the gross margin. Because transportation costs make up the largest portion of total cost-to-serve (TCtS), complete transportation spend visibility is necessary for optimizing TCtS.
By leveraging the appropriate TSM software, a company gains greater control over cost-to-serve. Managing TCtS involves addressing each of the five legs of the supply chain:
- Raw materials to manufacturing
- Site to market
- Market to trade consumer
- Distribution center to retail or DTC
- Reverse logistics (returns)
Although these costs fall in different lanes, they can be tracked and viewed holistically through advanced TSM software. By managing costs, improving performance, and empowering businesses to scale efficiently, transportation spend management software is the key to managing total cost to serve.
Data Normalization and Standardization
Normalizing and cleansing the data is just as important as extracting it. This is because data in its raw form isn’t always valuable for a company. Instead, the TSM software must ingest multiple data sources, cleanse them if needed, normalize them, and join them to inform decision-making.
In addition, having the right TSM software implements automation to streamline the data standardization process. This reduces data entry errors and lowers the risk of incorrect data interpretation, which is crucial to data compliance.
Sharing data across departments is part of end-to-end visibility. When a TSM system cleanses and normalizes the data, it can match or share it with other internal systems. For instance, the Trax TSM software shares data with TraxPays, an invoice payment automation service.
Reporting and Strategic Planning
When analyzing and visualizing data, supply chain leaders must consider four types of data analytics - descriptive, diagnostic, predictive, and prescriptive. For example, when describing historical data, analysts leverage different charts and graphs than those needed for forecasting or tracking KPIs.
Data Visualizations and Dashboards
Therefore, having TSM software in place that allows companies to visualize different data types in a comprehensive dashboard provides the added value of superior visibility. Ultimately, data analytics, including visualization capabilities, is tied to supply chain efficiency.
In addition to standardized data visualization tools, Trax offers options for clients to add custom analytics as part of its transportation optimization program. This involves Trax Advisory creating a customized metrics strategy.
In the end, incorporating advanced data analytics allows supply chain leaders to more accurately forecast supply and demand, which enables them to move from a reactive to a predictive phase of supply chain management.
TSM Software from Trax
As a global leader in Transportation Spend Management, Trax provides supply chain leaders with world-class cloud‐based technology solutions. Trax serves some of the world's most complex supply chains, empowering better management and control of their global transportation costs while improving data quality and advising on logistics management.
By partnering with Trax, supply chain leaders gain the tools, resources, and expertise to achieve TSM maturity. Contact Trax to learn more about its complete transportation spend management product suite and begin optimizing all areas of logistics management.
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.