In today's increasingly global economy, procuring freight efficiently and cost-effectively is a crucial driver of business success. But successful freight procurement is more than price — it requires a comprehensive understanding of the market, strategy, and best practices. If done right, freight procurement can give you a competitive advantage and increase your company's ROI.
This blog explains the ins and outs of freight procurement to help you understand the various strategies and best practices that can help you streamline the process and ensure a successful outcome.
Define Your Goals
The key to success in freight procurement is to define your goals upfront. Goal setting involves understanding the cost structure, service level, and other factors essential in procuring freight.
For instance, if you procure LTL shipping (less than a truckload), you must ensure timely delivery and track shipments closely for any issues. In this case, your goals would be to meet deadlines and ensure the safe delivery of your goods.
Once you define your goals, you can begin to create a strategy to attain them, which includes defining the processes for managing contracts, selecting vendors, and monitoring performance. Remember, your goals should follow the SMART (specific, measurable, attainable, realistic, and timely) principle.
Automate and Streamline Procurement Process
Freight procurement processes can be very labor-intensive and time-consuming; automation tools come in handy to enhance efficiency and streamline negotiations.
For example, you can automate RFQs (request for quote), so you don't have to search and contact vendors manually. Automation tools can also help you quickly compare bids and select the best one.
You have many automation tools to choose from, so make sure you pick the one that suits your business best.
Analyze Market Data and Set Benchmarks
Market data analytics offers insights into freight market trends and historical price movements. This way, you are better positioned to understand where the market is headed and set benchmarks for cost savings.
Analyzing historical data from your current contracts, plus forecasts of future trends, helps you negotiate better deals with your vendors while ensuring you get the best quality of service.
Leverage Freight Forwarders
Freight forwarders help you save time and money by managing all the logistics. The specialist arranges cargo on behalf of the shipper and consolidates information from multiple transportation providers.
You can also count on your freight forwarder for supply chain services, from air to ocean freight, inland transportation, warehousing, and cargo insurance. First, choose a freight forwarder specializing in the type of cargo you are dealing with.
Leverage Reverse Auction
The reverse auction allows buyers to broadcast a bid request and receive multiple responses from vendors in real time. With this, buyers can select the best vendor that meets their criteria in the shortest possible time.
The reverse auction is convenient for large orders and helps you get the best value for your money. The strategy also offers buyers more transparency and price visibility, so they can compare bids easily and make informed decisions.
Measure Performance
To evaluate the performance of your suppliers, you must develop a set of metrics that measure criteria such as:
On-time delivery
Damage rate
Invoice accuracy
Compliance with regulations
These metrics will give you an idea of your suppliers' service quality. Then, you can use these metrics to renegotiate your contracts and extract better deals from them.
Numerous software and services are available to help you monitor and measure supplier performance.
Conclusion
Freight procurement may seem complex, but with the right tools and strategies, you can streamline the process and make it more cost-effective. In addition, you can trust us to help you find the right combination of services that meet your needs. We offer freight forwarding, LTL, Truckload, Flatbed/Stepdeck/Double Drop trailer shipping, ocean freight, air freight, warehousing, transloading, and cross-docking services. Contact us or Request a Quote, and we’ll discuss how we can help your business.