The Line Item Most Operations Directors Overlook

By: Lance Healy

Operations directors have a lot on their plate; they have a hand in virtually every aspect of a business and are responsible for ensuring the entire organization runs smoothly.

But because operations directors are tasked with overseeing so many areas of the business, it’s difficult to have a finger on the pulse of what’s going on in every industry behind every area they manage.

There’s one industry that is changing so dramatically through incorporating new technology, that the companies at the forefront are saving in excess of 16%-21% on this unexpected and often overlooked expense line item. This industry that you can’t afford to ignore is freight management.

When searching for major areas for cost savings, operations personnel commonly overlook freight costs, quite frankly because you (or your team) may not be aware that there is an entirely different way to manage freight and ultimately reduce freight costs – and it goes way beyond just trying to negotiate a better rate.

Transportation costs continue to rise, accounting for an average of 42 percent of your total supply chain costs. That’s why more and more businesses looking for areas to reduce costs are turning to technology to do the following:

  1. Compare freight costs in real-time to ensure you’re always getting the best price
  2. Easily access shipment tracking updates, instead of calling or checking carrier websites
  3. Automate labor intensive processes, like auditing and reconciling freight bills.

By using the latest live connections technology, the top shipping departments are enabled to operate with full visibility, turning this overlooked area of business into a place for major savings. Companies at the top of their industries are employing this technology to reduce expenses and boost productivity.  To take your organization to the next level, it is important to understand how live connections technology is transforming the industry.

Operations Directors – Here’s what you need to know about the freight industry:

The freight industry is rapidly changing due to the introduction of technology that is already familiar to most consumers. For example, when you want to book a flight, it makes sense to visit a single provider who can show you all the available options at once. It’s become the norm to view all airlines, flight times, and prices on one screen; it ensures that you’re picking the best flight for your travel schedule, at the best available price, because you had access to all of the relevant information.

That same concept is making waves within the freight industry. Carriers, third-party logistics companies (3PLs), and commercial shippers alike are implementing systems to improve their freight management processes and add real-time information into their decision-making process.

Live connectivity with freight carriers creates the exact same concept as sites like Expedia or Travelocity but does so with your own pre-approved, preferred carrier base. Live connectivity includes a variety of technologies including application program interfaces (APIs), electronic data interchange (EDI), and web scrape. In short, live connectivity pulls forward all information to make the best decisions possible.

The “so what” of connecting directly to your carriers

Freight is commonly managed off a routing guide, which tells the shipper what carrier to use for a given shipment. Or, your shipping department may be using a transportation management system (TMS), that has a routing guide built behind it. Boiled down, these systems are static, and they do not allow an easy method for your carriers to come back to you and actively bid your business. Your rates are “locked” in through an annual (or longer) RFP bidding cycle.

Live connections give you the ability to see quotes directly from each of your carriers on every shipment, and comparing quotes ensures you’re always getting the best price.

From the perspective of an operations director, getting the best price is important: freight spend is a critical element that affects profitability. But beyond price, operations directors know the value of increased process efficiencies within an organization and live connectivity inherently impacts the following:

  • Minimize manual labor – Live connections with your carriers enables your shipping department to request real-time quotes on every shipment with the simple click of a button. No need to spend time referencing static carrier rate tables that only update once a year, or pour energy into creating tedious RFPs.
  • Streamline invoicing – Instead of allocating staff to conduct freight invoice audits manually as they come in, you can create system rules to flag outside-the-norm orders for review. Meanwhile, the remaining majority are automatically processed for prompt payment.
  • Easily generate actionable data – Meaningful logistics analytics are a must in today’s fast-paced business environment. Use this data to identify trends and increase process efficiencies within your shipping department.

Operations directors have eventful jobs that can put them in any given department at any given time. With live connections to your carriers, you can be sure that your shipping department will always have visibility to the best price for every shipment. And that means that you can cross that off your list and move on to the next business-critical project.

 

The bottom line?

Live connectivity to your carriers allows your shipping department to get more done, faster, and with fewer resources necessary. And with more than 1,300 connections already established with the nation’s carrier base, we’re likely already connected with your carriers.

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